Activity driver analysis

Activity driver analysis is a formal review of the activity drivers built into an activity-based costing system. The intent of the analysis is to evaluate the following:

  • Whether there is an actual causal relationship between the drivers and their associated cost objects.

  • Whether different drivers can be used, for which data accumulation is easier and/or less expensive.

  • Whether costs can be reduced by minimizing certain activities.

Related Courses

Activity-Based Costing
Activity-Based Management
Cost Accounting Fundamentals