Template: Identifying cost drivers Essay

Custom Student Mr. Teacher ENG 1001-04 8 April 2016

Template: Identifying cost drivers

Cost drivers are measurable factors that allow you to determine the relationship between the indirect cost and each program area. They are program-related units that cause an indirect cost to increase or decrease. Another way to think about it would be factors that can approximate the demand that each of your program places on the particular resource item. The appropriate driver may be different for each cost item, depending on which is the root unit that drives that particular expense, and it is up to you to determine the most relevant driver for your costs.

For each cost item, you can use this guiding question to determine the most appropriate driver:

What program-related factor causes this cost item to increase or decrease? (How do we meaningfully distribute this cost across programs?)

See next page for a list of common cost items and possible cost drivers.

What program-related factor causes this cost item to increase or decrease? (How do we meaningfully distribute this cost across programs?)

|Cost item | | |Possible cost driver (units) | | | |Cost per program varies with… | | |Salaries/benefits of staff members who | |Time required of staff member |Hours spent by the staff member on each program / total hours worked by | |work on more than one program (on | | |the staff member
| |activities identifiable by program) | | | | |Salaries/benefits of staff members who | |Time required of staff member (if |Hours spent by the staff member on each program / total hours worked by | |work toward general organizational | |possible to allocate by program); |the staff member (if identifiable) | |initiatives (not identifiable by program)| |otherwise, size of program |Proxy drivers: For marketing, number of beneficiaries/ total | | | | |beneficiaries; For fundraising, finance, and management, total costs of | | | | |program/ total costs of organization; For human resources, size of staff | | | | |on program/ total staff | |Office space rent and facilities | |Number of people; amount of space |Number of office staff in each program / total staff | |maintenance | |utilized |Sq. ft. occupied per program / total sq. ft. | |Utilities | |Utilities used |Number of office staff in each program / total office staff | |Supplies | |Supplies used |Supplies ordered by program/ total supplies | | | | |Other potential drivers, depending on the supply category (paper, toner, | | | | |stamps, …) | |IT hardware and maintenance | |Number of people using IT |Number of laptops used by program / total laptops | | | |equipment; units of equipment |Proxy drivers: number of staff per program / total staff | | | |requiring service |
| |IT software licenses | |Number of licenses required |Number of software licenses utilized by program/ total licenses | | | | |Proxy driver: flat allocation across programs | |Depreciation (equipment) | |Equipment used |Amount of equipment ordered by program / total equipment | | | | |Hours that the equipment is used by each program / total hours used | |Legal fees | |Hours of legal services required |Legal hours billed by program/ total hours billed by organization | | | | |Proxy drivers: flat allocation across programs | |Shared marketing materials and | |Materials printed; number of |Materials ordered by program/ total materials (if available) | |advertising costs | |advertisements; number of |Advertisements produced for each program / total ads (if available) | | | |beneficiaries |Proxy driver: number of beneficiaries per program/ total beneficiaries | |Subscriptions used by more than one | |Number of subscriptions |Number of readers per program / overall staff | |program | | | | |Training, conferences and special events | |Staff attendance |Number of attendees per program / overall staff |

* The cost drivers listed here are meant to be illustrative, not exhaustive. The cost driver may change depending on how your organization operates

Free Template: Identifying cost drivers Essay Sample

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  • University/College: University of Arkansas System

  • Type of paper: Thesis/Dissertation Chapter

  • Date: 8 April 2016

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