Cost drivers cost pools

An activity driver is something that influences the cost of an operation. Activity drivers are used to allocate the costs in secondary cost pools to primary cost pools, as well as to allocate the costs in primary cost pools to cost objects. A Cost Pool is a kind of cost strategy to identify the cost incurred by the individual departments or service sectors of the business entity. It helps in finding out the total of expenses incurred in manufacturing goods and in allocating the same to the different departments or service sectors based on some reasonable identifier known as a cost www.doorway.ruted Reading Time: 4 mins.  · They are considering adapting ABC costing and have estimated the cost drivers for each pool as shown: Recent success has yielded an order for 1, tables. Assume direct labor costs per hour of $ Determine how much the job would cost given the following activities:Author: Patty Graybeal, Mitchell Franklin, Dixon Cooper.

A Cost Pool is a kind of cost strategy to identify the cost incurred by the individual departments or service sectors of the business entity. It helps in finding out the total of expenses incurred in manufacturing goods and in allocating the same to the different departments or service sectors based on some reasonable identifier known as a cost driver. They are considering adapting ABC costing and have estimated the cost drivers for each pool as shown: Recent success has yielded an order for 1, tables. Determine how much the job would cost given the following activities, and assuming an hourly rate for direct labor of $25 per hour. Each activity cost pool is then assigned an Activity Cost Driver. With the help of these drivers, the cost is allocated to products. Cost driver analysis is the key to utilizing the concept of ABC Costing to its full potential. Correct activity cost driver determination is vital for effective product costing.

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