This video discusses cost drivers.

A cost driver is an activity that causes costs to occur. Machine hours, direct labor hours, units produced, the number of employees– all of these things could potentially be a cost driver. If a change in the activity level (e.g., an increase in the number of sandwiches made by a restaurant) leads to a change in costs (e.g., an increase in the cost of bread for the restaurant), then the activity is a cost driver. Thus, there is a cause-and-effect relationship between the activity and costs.

Some companies use a single cost driver to allocate manufacturing overhead. However, companies often have many cost drivers. Activity-based Costing was developed in the 1980’s to better measure costs by taking multiple cost drivers into consideration.