Definition:
Activity inputs are the resources that are required to perform a specific activity. These inputs can include:
- Labor: The human resources needed to carry out the activity.
- Materials: The raw materials or supplies used in the activity.
- Equipment: The machinery or tools required for the activity.
- Facilities: The physical space or infrastructure needed for the activity.
Key points about activity inputs:
- Cost drivers: Activity inputs are often used as cost drivers in activity-based costing (ABC) to allocate overhead costs to products or services.
- Efficiency: The efficiency of using activity inputs can affect the cost of an activity.
- Optimization: Businesses can optimize their use of activity inputs to reduce costs and improve efficiency.
Why are activity inputs important?
- Cost management: Understanding activity inputs can help businesses identify and manage costs more effectively.
- Resource allocation: Activity inputs can be used to allocate resources more efficiently.
- Performance measurement: Activity inputs can be used to measure the performance of activities and processes.
In essence, activity inputs are the resources that are necessary to perform an activity, and understanding them is essential for effective cost management and resource allocation.
