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Definition of activity driver
a measure of the demands on activities and,
planning approach applying activity drivers to estimate the levels and costs of activities necessary to provide the budgeted quantity and
A cost allocation system that compiles costs and assigns
a repetitive action performed in fulfillment of business functions
the process of detailing the various repetitive actions that are performed in making a product or
A method of budgeting that develops budgets based on expected activities and cost drivers – see also activity-based costing.
A method of costing that uses cost pools to accumulate the cost of significant business activities and then assigns the costs from the cost pools to products or services based on cost drivers.
A relatively new method advocated for the
a process using multiple cost drivers to predict and allocate costs to products and services;
a discipline that focuses on the activities incurred during the production/performance process as the way to improve the value received
a segment of the production or service
hours, machine hours or volume of production
Ratios that measure how effectively the firm is managing its assets.
an activity that is necessary for the operation of the business but for which a customer would not want to pay
The most significant cause of the cost of an activity, a measure of the demand for an activity
a factor that has a direct cause-effect relationship
A factor that directly impacts the incidence of a cost, and which is generally
cost driver analysis
the process of investigating, quantifying,
A factor that has a direct impact on the incurring of a cost. For example, adding
non-value-added (NVA) activity
an activity that increases the time spent on a product or service but that does not increase its worth or value to the customer
value-added (VA) activity
an activity that increases the worth of the product or service to the customer
A cost that does not vary in the short run, irrespective of changes in any
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