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Activity cost driver definition

Accounting Tools

What is an Activity Cost Driver? An activity cost driver is an action that triggers the incurrence of a cost. A cost driver causes variable expenses to be incurred. There may be more than one activity cost driver that initiates the incurrence of a variable expense.

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Activity driver analysis definition

Accounting Tools

What is Activity Driver Analysis? Activity driver analysis is a formal review of the activity driver s built into an activity-based costing system. The intent of the analysis is to evaluate whether there is an actual causal relationship between the drivers and their associated cost objects.

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Activity cost assignment definition

Accounting Tools

Related Courses Activity-Based Costing Activity-Based Management Cost Accounting Fundamentals What is Activity Cost Assignment? Activity cost assignment involves the use of activity drivers to assign costs to cost objects.

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Activity base definition

Accounting Tools

Related Courses Activity-Based Costing Activity-Based Management Cost Accounting Fundamentals What is an Activity Base? An activity base is a measured activity that is used to allocate overhead costs. A more complex allocation system might employ several activity bases.

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Activity cost pool definition

Accounting Tools

What is an Activity Cost Pool? An activity cost pool is an account in which is aggregated a number of costs that are related to a certain type of activity. The cost pool concept is most heavily used in an activity-based costing system, and least used when there are few overhead costs to be allocated.

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Homogeneous cost pool definition

Accounting Tools

Related Courses Accounting for Inventory Activity-Based Costing Cost Accounting Fundamentals What is a Homogeneous Cost Pool? A homogeneous cost pool is a set of costs whose changes are triggered by a single cost driver. A cost driver is the reason why a cost occurs.

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Cost object definition

Accounting Tools

Related Courses Activity-Based Costing Activity-Based Management Cost Accounting Fundamentals What is a Cost Object? For example, this can be a product, product line , service, project, customer , distribution channel , or activity. Related Articles Activity Cost Assignment Activity Cost Pool Activity Driver