Activity Based Accounting

A customer who manufactures automotive aftermarket products was engaged in an activity-based accounting exercise to assign overhead costs to their various departments. In particular, one department uses considerably more compressed air than all the other departments and should bear most of the company’s compressed air costs. They needed to establish how much compressed air each department uses and allocate compressed air costs accordingly.

Using Model 9095 Digital Flow Meters, they were able to measure air consumption for the various departments. From that data they were able to calculate a burden rate for each department according to their use.

Joe Panfalone
Application Engineer

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