Activity based costing resource driver

In an activity-based costing system, overhead costs are divided into separate: A. Cost objects. B. Activity cost pools. C. Resource consumption and activity consumption cost drivers. D. Product-line cost pools. E. Plantwide or departmental cost pools.  · A cost driver affects the cost of specific business activities. In activity-based costing (ABC), an activity cost driver influences the costs of labor, maintenance, or other variable costs. Cost. Definition of Resource Cost Drivers: The allocation bases that are used to allocate shared resources to individual activities. They are equally known as first stage allocation bases (e.g. labour time, metros square, etc.).

Activity Cost Driver Rate Calculation – It is found by dividing the overall cost of an activity by the cost driver, as displayed below. Activity driver rate = Total cost of an activity/Cost driver. Charging Activity Costs to the Product Costs – Activity costs will be charged to products using a cost driver rate based on the activities required by each product. As a result, both the machine-related set-up activity cost and the inspection activity cost will be charged to the product. A single principal Activity Cost Driver (ACD) is identified for each activity and an average cost per ACD is computed and used to assign activity costs to objects based on the consumption of the number of drivers by each object. The two main issues associated with this approach are. Decisions + Analysis. Driver-Based Costing. Companies use methods like Activity-Based Costing, Driver-Based Costing, and TDABC with the goal of allocating resource and overhead costs in a meaningful way to improve customer and product profitability. Enabling driver-based costing processes gives you the ability to accurately assign resource cost and spending pools to your products and customers using relevant and measurable drivers.

4 May Recognizing that natural environment is reaching its maximum limits in providing resources and diluting the waste generated by human. Resource drivers are the factors chosen to approximate the consumption of resources by the activities. Each type of resource traced to an activity becomes a. d) Differentiating resource drivers and activity drivers e) Proposing a cost allocation system. BCAS Activity Based Costing (ABC).