11.7. Cost Absorption Base And Cost Driver

Manufacturing overhead is applied to every work in process or finished good in proportion to some ratio.

Table 11-2. Common examples of process and cost absorption base in traditional costing accounting (or process and unit of measure of cost driver in ABC)

Process (activity)Cost Absorption Base (Unit of measure of cost drivers)
cutting steel barsmachine hours
stitchinglabor hours spent
coatingweights of finished item
cutting steel barsmachine hours
typewriting documentsnumber of pages typed
assembling item Anumber of parts in a product
transporting goodskilo meters driven
selling ticketsnumber of different customers served