Activity Driver
An activity driver is a factor that influences the cost and performance of a specific activity within an organization. These drivers, such as machine hours or labor hours, are used in activity-based costing to allocate costs more accurately based on the consumption of resources by each activity.
Related glossary terms
Activity-Based Costing (ABC)
Activity-Based Costing (ABC) allocates overhead to activities by resource use. It gives more accurate cost data than traditional costing to support decisions.
Activity Dictionary
An activity dictionary lists organizational activities with descriptions, costs, and resources. It is the ABC reference for identifying cost-driving processes.
Activity Level
Activity level is the volume of operations in a period—units produced or transactions processed. It guides cost management and resource allocation in logistics.
Activity Ratio
An activity ratio measures how efficiently resources generate revenue. Metrics like inventory and asset turnover reveal performance gaps and opportunities.
