A factor that causes, or "drives," an activity's costs is called a(n) . (Enter only one word per blank.)

The factor that causes, or "drives," an activity's costs is called a "cost driver."

Cost drivers are essential in the field of managerial accounting and cost management as they help organizations understand the relationship between costs and the activities that generate them. Identifying cost drivers allows businesses to allocate resources more efficiently and make informed decisions on pricing, budgeting, and financial forecasting. Examples of cost drivers include the volume of production, machine hours, labor hours, or the number of setups required in a manufacturing process. By analyzing cost drivers, companies can improve their cost management strategies and enhance their operational efficiency.