Cost pool cost driver

Cost Pool Definition. A Cost Pool is a kind of cost strategy to identify the cost incurred by the individual departments or service sectors of the business entity. It helps in finding out the total of expenses incurred in manufacturing goods and in allocating the same to the different departments or service sectors based on some reasonable identifier known as a cost www.doorway.ruted Reading Time: 4 mins.  · At each step of the production (activity pools), there is a cost driver that has a rate that reflects the cost of producing with that activity. Thus by the end of the production, the costs assign. Using the concept of activity cost pools, the accountant at Chris Inc. identified cost drivers including factory square footage, maintenance hours, labor hours and the total output produced. These three different cost pools are finalized, and the cost incurred is then appropriately dividend amongst other present alternates.

What is cost pool cost driver and overhead? An activity is a cost driver, such as purchase orders or machine setups. The cost driver rate, which is the cost pool total divided by cost driver, is used to calculate the amount of overhead and indirect costs related to a particular activity. Your cost drivers are all the activities that you do that cost you money to make your product. A cost pool is a grouping of individual costs, typically by department or service center. Cost allocations are then made from the cost pool. For example, the cost of the maintenance department is accumulated in a cost pool and then allocated to those departments using its services. Cost pools are commonly used for the allocation of factory overhead to units of production, as required by several accounting frameworks.

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