Types of Activity Measures & Activity Cost Pool And Corresponding Activity Measures
In an Activity-based costing system(ABC), the term allocation base is replaced by the term activity measure, and the term cost driver is also used.
The two types of activity measures are :
- Transaction driver – a simple count of the number of times that an activity occurs.  This is the least accurate type of activity measure.
- Duration driver – measures the amount of time needed to perform an
activity. This is more accurate than a transaction driver, but it takes more effort to record.
The following are the examples of activity cost pools and corresponding activity measures:
| Activity Cost Pool | Definition | Activity Measures | |
| 1 | Customer order |
Assign all costs of resources that are consumed by taking and processing customer orders |
Number of customer orders |
| 2 | Product Designs |
Assign all costs of resources consumed by designing products |
Number of product design |
| 3 | Order Size |
Assign all costs of resources consumed as a consequence of the number of units product |
Machine-hours |
| 4 | Customer Relations |
Assign all costs associated with maintaining relations with customers |
No of active customers |
- What is Activity-Based Costing System?
- Activity-Based Costing System: The Necessity To Know The “True” Cost Of A Product
- Steps In Implementing Activity-Based Costing System(ABC):
- Short Term Decision Making: Other Relevant Cost Techniques(Part2)
- Limitations of Activity-Based Costing (ABC) System
- Activity Based System Question No 4 (with answer)
- Checklist On Types Of Waste Activities In An Organization
April 18, 2006
Tags: activity based costing system
Posted in: Activity-Based Costing
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