Cost drivers of activity based costing

 · QuestionChoosing cost drivers, activity-based costing, activity-based management. Pastel Bags (PB) is a designer of high-quality backpacks and purses. Each design is made in small batches. Each spring, PB comes out with new designs for the backpack and for the purse. The company uses these designs for a year and then moves on to the next trend. The Choice of Cost Drivers in Activity-Based Costing: Application at a Chinese Oil Well Cementing Company Pingxin Wang Hangzhou Dianzi University, Xi’an Jiaotong University, China Fei Du University of Southern California Dinghua Lei Xi’an Jiaotong University, China Thomas W. Lin University of Southern CaliforniaFile Size: 1MB.  · Multiply the number of cost drivers by the cost driver rate. Activity based costing example can help make the step-by-step process above much clearer. Take, for example, company ZC. It gets an electric bill of $ each year from the power company. Labor hours put into the manufacturing process at ZC directly relate to the cost of electricity.

Activity based costing (also known as ABC costing) refers to the allocation of cost (charges and expenses) to different heads or activities or divisions according to their actual use or on account of some basis for allocation i.e. (cost driver rate which is calculated by total cost divided by total no. of activities) to arrive at a profit. Cost driver is a feature that affects the activity costs. Labor, units or machine parts, and hours are some of the examples of cost drivers. For every cost pool, there can be one or more given cost driver. Cost driver rate is found when the total cost drivers in a cost pool divide the total overhead. Multiply the number of cost drivers by the cost driver rate. Activity based costing example can help make the step-by-step process above much clearer. Take, for example, company ZC. It gets an electric bill of $ each year from the power company.

Cost basis is the amount you paid for an investment, as calculated for tax purposes. Learn how to calculate it and why it’s important when determining capital gains. Hill Street Studios/Getty Images Cost basis is the amount you paid for an. If you want to pilot the friendly skies yourself, the price can be exorbitant. A private airplane can cost as much as $ million. Several key factors contribute to the sale price of an airplane, including whether you’re looking for new or. Cost accounting centers around recognizing and reporting costs in different ways. Accountants use different costing methods to meet different financial-reporting goals, such as deferring expenses until future periods or maximizing reported.