Learn Your Accounting ABCs --Dickeson

To remedy this lack of measurement, ABC would have us set up defined activities called "cost drivers" for those support activities to account separately for them. For ABC you add up the costs of the estimating department, for example, divide by the number of estimates, and you have a cost driver for estimates. Add those estimate drivers to a job or account and the cost of estimating can be deducted from sales revenue to arrive at profitability by job. Repeat this exercise for all of those other support resource activities to arrive at cost drivers by department. There are variations, of course, but this is my basic understanding of ABC.