Cost drivers are designated in an activity-based cost¬ ing system to

• identify what causes a cost to be incurred so that it can be controlled.

• indicate at what level (unit, batch, product/ process, or organizational) a cost occurs.

• allow costs with similar drivers to be pooled to¬ gether and a single, appropriate activity basis be used to allocate those costs to products or services.

• manage costs more effectively and efficiently.

• identify the costs related to product variety and product/process complexity.

LO.1