The cost of operating an area of responsibility in a business entity includes directly traced cost from external transactions, as well as cost assigned from internal service areas. Typically, internal transactions include cost assigned from a service department to a line department. A cost driver is configured in each service department to use as the basis for assigning costs to line departments. The cost driver is the value added by the service department and should be based on a cause-and-effect relationship between the service cost and the use of the service department resource in line departments. This author suggests an alternative cost assignment procedure-one in which the cost driver rate is calculated based on the capacity level of the resource that is available in each service department, rather than the planned level of resource use.