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What are cost drivers, and what are Netflix's cost drivers?

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The question is what are the cost drivers at Netflix. First, what is a cost driver? It is activity that causes costs to rise or fall. So, what activities at Netflix cause their expenses to shift? Let me give you three, starting with the most important one and moving to the next ...

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Your tutorial is 173 words and gives you three cost drivers at Netflix and explains how they cause costs to shift.

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Cost Drivers at Netflix, Inc

Netflix Inc., Form 10-K, YE 12/31/2006
Retrieved from http://www.secinfo.com/d14D5a.u19Me.htm

This website provides Netflix's annual report for 2006. Specifically, focus on the section entitled, â??Managementâ??s Discussion and Analysis of Financial Condition and Results of Operations.â? Use the information in this report to answer the following questions:

1. What drives price and output volume for Netflix?

2. What factors drive cost, unit cost, and demand for inputs to Netflix's service outputs?

3. Construct (linear) models of relationships between cost drivers and costs. Under what conditions are such models inappropriate?

4. In general, who in an organization is responsible for different components of a cost variance?

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