Cost Driver Decision Methods for an Activity-based Cost System

Companies currently face increased competition and shortened product life cycles. Cost information that allows managers to make concise and rapid decisions efficiently of priority concern. Using Grey relational analysis, this study describes cost driver selection model based on an activity-based costing system. Analysis results indicate that the Grey relational analysis can obtain an optimal cost driver using only limited data. Compared with the regression model, Grey relational analysis is more time efficient and requires fewer statistics. Results of this study demonstrate that the proposed model can effectively assist managers in selecting a cost driver.