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duration driver


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A measure of the amount of time required to perform an activity when this is a significant cost driver. Duration drivers provide a more accurate basis for allocating costs than the number of transactions when there is a significant variation in the time required to complete an activity. For example, if all deliveries are completed in 10 minutes then it is simple (and accurate) to use the number of deliveries as a cost driver. If one delivery requires 10 minutes and another two hours, then using time for deliveries as the cost driver will improve the accuracy of the costing system. However, duration drivers are often seen as more expensive to measure and record than transaction drivers.

Subjects: Accounting.


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