Activity cost driver rates

A cost driver is a variable, such as the level of activity or volume, that causally affects total costs over a given time pan contributes the most to the cost, causes the cost!For example, the number of vehicles assembles is a driver of the costs of steering wheels on . Activity cost driver rate. is calculated by dividing activity expenses by the total quantity of the activity cost driver (e.g., machine set up expenses divided by the total number of machine set up hours). Go Back. Don't see the term you are looking for?  · Total overhead cost = $ , No. of direct labour hour: Standrd – hrs per unit * 10, units = 5, hs Speciaty’– hrs per unit * 2, units = hrs Total no. of hours (5, + ) = 5, hrs. Then, a common overhead rate can be calculated taking the base as direct labour hours. So, $ ,/ = $ 18 per labour hour. Therefore, cost per Estimated Reading Time: 3 mins.

An activity cost driver is a component of a business process. Activity cost drivers are used in activity-based costing, and they give a more accurate determination of the true cost of business. Activity Activity Cost Driver Cost Driver Activity Level Costs Activity Rate;. Calculating the cost driver rate is done by dividing the $50, a year electric bill by the 2, hours, yielding a cost driver rate of $ For Product XYZ, the company uses electricity for

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