This document outlines an approach to activity costing that is practical, consistent, and accurate. It explains that activity costing can be used to determine the cost per transaction of processes and the resources needed to process a given amount of work. The document provides principles for activity costing, including defining the scope of activities, identifying resources and their costs, and measuring resource use per transaction. It also gives an example of using activity costing to calculate the cost per order and annual cost of an IT procurement process, as well as the full-time employees required.