Business, Legal & Accounting Glossary
An activity measure is a standard by which the primary output of an activity is gauged.
In activity based costing systems, this is a measure of the volume or rate of activity in an activity cost pool used as a basis for allocating costs.
Ideally, the activity measure selected will be such that any rise or fall in the measure closely correlates with a rise or fall in the activities total cost.
As a result, the terms activity measure and cost driver are often used anonymously.
Standard by which the primary output of an activity is gauged.
Examples of activity measures include:
In a large international organisation there may potentially be thousands of activity measures, whereas in a small organisation perhaps only 20-30 measures may apply.
Note; there is no optimal number of activity measures applicable to an organisation. It’s also worth mentioning that managers also have a tendency to prioritise one type of activity measure over another whilst measuring performance.
The terms activity measure and cost driver are often used synonymously.
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Definitions for Activity Measure are sourced/syndicated and enhanced from:
This glossary post was last updated: 7th May, 2019