What Are Cost Drivers -

"That's the heat," Mariana sighed. "The air conditioner."

"A cost driver," Leo said, "isn't just a cost. It’s the activity that makes the cost appear. It’s the engine. The gas pedal."

Mariana owned a bakery called "The Daily Rise." For two years, her books were a mess. She knew she spent money—on flour, on staff, on the old oven that wheezed like an asthmatic dog—but she couldn't tell why the costs went up and down. what are cost drivers

One Tuesday, her accountant, a patient woman named Leo, sat her down with three months of receipts.

So she changed things.

Don't just look at what you spend. Look at what activity makes you spend it . That activity is your cost driver. Manage the driver, and the cost follows.

She merged delivery routes so the van made 12 stops instead of 18, saving $45 a week in fuel. "That's the heat," Mariana sighed

Leo shook her head. "No. Look at the production log. In August, you made 400 croissants a day instead of 200."