This information suggests three different ways of apportioning costs:
Basis / driverUnitProduction hoursBatches
Driver volume8,0002,5008
OAR$5 per unit$16 per hour%5,000 per batch
Overheads to X2,000×5=$10,0001,000×16=$16,0005×5,000=25,000
Overheads to Y6,000×5=$30,0001,500×16=$24,0003×5,000=15,000
The selection of the cost driver can therefore make a significant difference.
