Activity analysis is the process of identifying and examining the different activities performed in a business to understand their cost and efficiency.

Simple Meaning:

It means studying what work is done in a company and how much each activity costs.

Purpose:

To find unnecessary activities

To control and reduce costs

To improve efficiency

To support Activity-Based Costing

Example:

In a factory, activities like purchasing, production, quality checking, and packaging are analysed to know how much each activity contributes to total cost.

In short, activity analysis helps businesses understand where time and money are being spent.