Cost pool
Cost pool is a grouping of indirect costs that share the same cost driver, allowing them to be allocated as a single amount to products or jobs rather than tracked individually.
Also known asactivity cost pool
See it move
A four-step flow diagram shows indirect costs — electricity, supervision, and depreciation — grouped by a shared cost driver into a single cost pool for machine running, totalling €84,000. Dividing the pool by 6,000 budgeted machine hours produces a pool rate of €14 per hour, which is then multiplied by each product's actual machine hours to calculate its overhead charge.
Check yourself
A manufacturer maintains two overhead cost pools: a machining pool of €60,000 allocated by 5,000 machine-hours, and an inspection pool of €20,000 allocated by 200 inspections. Job X uses 120 machine-hours and requires 4 inspections. What is the total overhead charged to Job X?