Cost behavior-cost drivers , Managerial Accounting

Assignment Help:

Cost Behavior

A firm's cost position results from the cost behavior of its value activities. The cost behavior is based on a number of structural factors which influence cost, which I term cost drivers. Numerous cost drivers can combine to determine the cost of a given activity. The significant cost driver or drivers can vary among firms in the similar industry if they employ different value chains. A firm's relative cost place in a value activity depends on its standing vis-à-vis important cost drivers.

Cost Drivers

Ten major cost drivers determine the cost behavior of value activities: economies of scale, learning, and the pattern of capacity utilization, interrelationships, linkages, integration, timing, optional policies, position, and institutional factors. Cost drivers are the structural causes of the cost of an activity and can be more or less under a firm's control. Drivers frequently interact to establish the cost behavior of a specific activity, and the associative impact of cost drivers will vary widely among value activities. Thus no one cost driver, such as scale or the learning curve is ever the sole determinant of a firm's cost position. Diagnosing the cost drivers of each value activity permits a firm to gain a complicated understanding of the sources of its relative cost position and how it may be changed.


Related Discussions:- Cost behavior-cost drivers

ACCT II, 1. Common-size analysis of company''s income statement, Balance sh...

1. Common-size analysis of company''s income statement, Balance sheet 2. Horizontal analysis of company''s income and balance sheet : for the last two years for both 3.perform rati

Mr, i want to get the answer for exercises 2.1 and 2.2 on strategic and tac...

i want to get the answer for exercises 2.1 and 2.2 on strategic and tactical decisions

Managerial accounting, As an MBA Managerial Accounting Student, John has as...

As an MBA Managerial Accounting Student, John has asked you to evaluate the alternatives available and make recommendations as to the best course of action, and present it in a Rep

Schedule of non-discretionary data, Schedule of Non-discretionary Data: and...

Schedule of Non-discretionary Data: and tables, in a form that is readable and readily understood.  This worksheet is to be used to identify/capture the various non-discretionar

Definition of the mission and goals of the organization , Definition of the...

Definition of the Mission and Goals of the Organization Generally the organization has already established mission and aim statements. Though, it may be essential to redefine

Define the balanced score card, Define the Balanced Score Card? 1. Dist...

Define the Balanced Score Card? 1. Distinguish between standard control and budgetary costing. 2. Define the ‘Balanced Score Card? Explain the steps in implementing ‘Balance

What is scientific standards and variance analysis, What is  Scientific st...

What is  Scientific standards and Variance analysis The important steps of standard costing as described above may be summarized as follows; 1) Scientific standards: stand

Balanced score card, Balanced Score Card This is a popular approach in ...

Balanced Score Card This is a popular approach in current management thinking which consists of a variety of indicators both financial and non-financial. The balanced scorecard

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd