Explain the Term "Cost Driver" and Give Several Examples

question 105

Essay

Explain the term "cost driver" and give several examples.

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Definitions:

GAAP

Generally Accepted Accounting Principles; a set of accounting standards, principles, and procedures that companies must follow when compiling their financial statements in the U.S.

Convertible Bonds

Bonds that can be converted into a predetermined number of a company’s shares at certain times during their life, usually at the discretion of the bondholder.

Diluted Earnings Per Share

A metric that calculates the quality of earnings per share (EPS) if all convertible securities were converted into common stock, indicating the potential dilution that could occur.

Diluted EPS

Earnings per share calculated under the assumption that all convertible securities and options have been converted into additional shares, potentially lowering the EPS.