Activity cost pool

An activity cost pool is an account in which is aggregated a number of costs that are related to a certain type of activity. The grand total of these costs is then allocated to products and other cost objects in order to gain a better understanding of the total costs incurred by a product or cost object. A number of different cost pools may be used in order to more distinctly identify the costs of different activities, but doing so also requires more accounting effort. Consequently, most organizations organize their costs into only a small number of activity cost pools. The cost pool concept is most heavily used in an activity-based costing system.