Customer-level activity is a cost pool that includes expenses for sales calls and providing client entertainment.
Sales calls, catalog mailings, and general technical help unrelated to any particular product are some of these operations that are related to individual clients. An activity cost pool is a collection of all expenses related to carrying out certain business activities, such as producing a specific product. It is easier to obtain a precise estimate of the cost of activity by combining all expenditures incurred in that work. An activity cost pool is a temporary account used exclusively to estimate how much a particular activity costs a firm. It comprises both fixed and variable costs.
A cost pool for an activity is the total expense for carrying out a certain business operation. A temporary account, also known as an activity cost pool, which combines both fixed and variable expenses, enables a corporation to precisely project the cost of a certain operation. Activity-based costing, a type of accounting that is frequently used in manufacturing and production, employs activity cost pools. In order to effectively allocate costs and make production decisions that will increase profit margins for items, activity cost pools are helpful.
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