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Explain the categories of The activity cost drivers
The activity cost drivers can broadly be classified into following three categories:
1) Transaction drivers: for example the purchase orders processed customer orders processed inspection performed and the set-ups undertaken all count the number of times an activity is performed.
2) Duration drivers: mean the amount of time required to perform an activity example of duration drivers arc set-up hours and inspection hours.
3) Intensity drivers: refer to drivers which directly charge for the resources used each time as activity Is performed. Duration drivers establish an average hourly rate of performing activity resources relevant to a product.
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