ECONOMICS

Detailed explanation-1: -A cost driver, also known as an activity driver, is used to refer to an allocation base. Examples of cost drivers include machine setups, maintenance requests, consumed power, purchase orders, quality inspections, or production orders.

Detailed explanation-2: -Nonunit-based cost drivers are causal factors that explain the consumption of nonunit-related overhead. Examples include setup hours, number of moves, and hours of inspection. 3. An overhead consumption ratio measures the proportion of an overhead activity consumed by a product.

Detailed explanation-3: -Activity cost drivers include things such as labor hours, machine hours, and customer contacts. They are used in activity-based costing (ABC) – a segment of managerial accounting.

Detailed explanation-4: -Non-unit-level activity drivers are factors, other than the number of units produced, that mea sure use of overhead resources. For example, setup costs are not driven by the number of units, but by the number of setups, a non-unit-level activity driver.