Supply Chain Glossary - A

Supply Chain Glossary - A

activity analysis

The identification and description of activities within an organization for the purpose of activity-based costing.

In activity-based cost accounting, a budgeting process employing knowledge of activities and driver relationships to predict workload and resource requirements in developing a business plan. Budgets show the predicted consumption and cost of resources using forecast workload as a basis. The company can use performance to budget in evaluating success in setting and pursuing strategic goals; this activity is part of the activity-based planning process.

A cost accounting system that accumulates costs based on activities performed and then uses cost drivers to allocate these costs to products or other bases, such as customers, markets, or projects. It is an attempt to allocate overhead costs on a more realistic basis than direct labor or machine hours. Syn: activity-based costing, activity-based cost accounting. See: absorption costing.


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