| Activity | Resource Cost Driver | Total Annual Cost | |----------|----------------------|-------------------| | Machine operation | Machine hours | $1,000,000 | | Setup | Setup hours | $600,000 | | Quality inspection | Inspection hours | $500,000 | | Material handling | Number of material moves | $300,000 | | | | $2,400,000 |
= $1,000,000 / 50,000 machine hours = $20 per machine hour cost driver analysis example
| Activity | Description | |----------|-------------| | Machine operation | Running saws, planers, CNC routers | | Setup | Preparing machines for different products | | Quality inspection | Checking dimensions and finish | | Material handling | Moving lumber and parts to workstations | For each activity, we determine what causes resource consumption: | Activity | Resource Cost Driver | Total
= $500,000 / 2,500 inspections = $200 per inspection 000 | | | | $2
= $600,000 / 1,200 setups = $500 per setup