Define: Activity Base

Activity Base
Activity Base
What is the dictionary definition of Activity Base?
Dictionary Definition of Activity Base

Activity Base refers to a method of allocating costs to products or services based on the activities involved in producing them. It involves identifying the various activities involved in the production process and assigning costs to each activity based on its usage. This method helps in determining the true cost of a product or service and enables businesses to make informed decisions about pricing, production, and resource allocation. Activity Base is commonly used in cost accounting and is an important tool for businesses to manage their costs effectively.

Full Definition Of Activity Base

Activity Base is a legal concept that refers to the method used to allocate costs to different activities within an organisation. It is commonly used in cost accounting to determine the true cost of producing goods or providing services. The activity base is typically a measure of the level of activity, such as the number of units produced, machine hours used, or labor hours worked. By allocating costs based on the activity base, organisations can more accurately determine the cost of each activity and make informed decisions regarding pricing, resource allocation, and performance evaluation. Activity Base is an important tool for businesses to improve cost management and enhance overall efficiency.

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This site contains general legal information but does not constitute professional legal advice for your particular situation. Persuing this glossary does not create an attorney-client or legal adviser relationship. If you have specific questions, please consult a qualified attorney licensed in your jurisdiction.

This glossary post was last updated: 29th March 2024.

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