Activity Driver Analysis

DEFINITION of 'Activity Driver Analysis'

The identification and assessment of the factors that are involved in the costing of goods and services. Activity driver analysis is part of activity-based costing, and helps management trace the cost of certain activities to cost objects. Activity driver analysis compares the different activity drivers and associated costs in an attempt to reduce costs and increase efficiency.

BREAKING DOWN 'Activity Driver Analysis'

Activity-based costing is a type of costing that identifies activities within the business and estimates the resources required to fulfill each activity. Activity driver analysis identifies the different factors that drive costs associated with an activity, and allows management to evaluate alternative activity drivers that might be more cost efficient in terms of machine hours, labor, materials etc.

RELATED TERMS
  1. Activity Cost Driver

    A factor that influences or contributes to the expense of certain ...
  2. Activity Center

    A pool of activity costs associated with particular processes ...
  3. Activity Dictionary

    A list of particular activities that are utilized in activity-based ...
  4. Cost Accounting

    A type of accounting process that aims to capture a company's ...
  5. Driver

    Anything that could materially affect either a company's earnings ...
  6. Activity Cost Pool

    In managerial accounting, a set of costs which are incurred when ...
Related Articles
  1. Investing Basics

    The Basics Of Value Chain Analysis

    Value chain analysis establishes an action plan to understand and implement actvities that create values to a firm's clients, resulting in firm profits.
  2. Economics

    Understanding Operating Activities

    Operating activities are the daily processes conducted by a company to generate income.
  3. Economics

    What are Business Activities?

    Business activities are any actions in which a company engages to make a profit.
  4. Economics

    Explaining Activity-Based Costing

    Activity-based costing (ABC) is a managerial accounting method that assigns certain indirect costs to the products incurring the bulk of those costs.
  5. Trading Strategies

    Active or Passive? How to Blend Aspects of Both

    Investment fund strategies can broadly be divided into either active management or passive management.
  6. Economics

    Understanding Cost of Revenue

    The cost of revenue is the total costs a business incurs to manufacture and deliver a product or service.
  7. Economics

    Understanding Marginal Cost of Production

    Marginal cost of production is an economics term that refers to the change in production costs resulting from producing one more unit.
  8. Professionals

    Factors Affecting the Cost of Capital

    CFA Level 1 - Factors Affecting the Cost of Capital. Learn about the various factors affecting the cost of capital. Discusses both the controllable and uncontrollable influences facing a company.
  9. Mutual Funds & ETFs

    Exchange-Traded Funds: Active Vs. Passive Investing

    Although indexing (a passive investment strategy) has been used by institutional investors for many years, it is still relatively new for the typical individual investor. Because ETFs use predominately ...
  10. Home & Auto

    5 Reasons The Other Driver's Insurer Won't Pay

    You drive below the speed limit when another driver plows into your car. You assume their insurance company should pay, but that's not the case every time.
RELATED FAQS
  1. How much money can Uber drivers make?

    Driving for Uber can earn an individual up to $90,000 per year according to the company, but the yearly income of an Uber ... Read Answer >>
  2. What are the different types of costs in cost accounting?

    Learn about the different types of costs associated with cost accounting, such as direct, indirect, fixed, variable and operating ... Read Answer >>
  3. How are fixed costs treated in cost accounting?

    Learn how fixed costs and variable costs are used in cost accounting to help a company's management in budgeting and controlling ... Read Answer >>
  4. What is the difference between direct costs and variable costs?

    Learn about variable costs and direct costs, how direct costs and variable costs are classified and the differences between ... Read Answer >>
  5. What are examples of key operating activities in a company?

    Discover the things that make up a company's operating activities, including examples of some the key operating activities ... Read Answer >>
  6. How do fixed and variable costs each affect the marginal cost of production?

    Learn about the marginal cost of production, how to calculate the marginal cost, and how fixed costs and variable costs affect ... Read Answer >>
Hot Definitions
  1. Law Of Demand

    A microeconomic law that states that, all other factors being equal, as the price of a good or service increases, consumer ...
  2. Cost Of Debt

    The effective rate that a company pays on its current debt. This can be measured in either before- or after-tax returns; ...
  3. Yield Curve

    A line that plots the interest rates, at a set point in time, of bonds having equal credit quality, but differing maturity ...
  4. Stop-Limit Order

    An order placed with a broker that combines the features of stop order with those of a limit order. A stop-limit order will ...
  5. Keynesian Economics

    An economic theory of total spending in the economy and its effects on output and inflation. Keynesian economics was developed ...
  6. Society for Worldwide Interbank Financial Telecommunications ...

    A member-owned cooperative that provides safe and secure financial transactions for its members. Established in 1973, the ...
Trading Center