10 ACTIVITY RATES TELL MANAGERS THE AVERAGE COSTS OF IDLE CAPACITY S...

8-10 Activity rates tell managers the average

costs of idle capacity should not be assigned to

cost of resources consumed in carrying out a par-

products. These costs represent resources that

ticular activity such as processing purchase or-

ders. An activity whose average cost is high may

are not consumed by the products.

be a good candidate for process improvements.

Benchmarking can be used to identify which ac-