Wednesday, June 19, 2019
Cost Drivers Essay Example | Topics and Well Written Essays - 500 words
Cost Drivers - Essay ExampleFinally, make up drivers includes hours of time, number of employees, number of setups, number of wheel, number of enquiries, number of products produced, number of machines maintained, and number of hours of supervision.Cost demeanour normally relate to various activities as well as the consumption of resources ((Hansen et al. 2009). Such resources have costs which are either fixed and do non vary drively with resource usage in the short run or variable and varies in direct proportion to the resource consumption. Activities usually land resources and the costs of such resources often follow various behavioural patterns (Needles et al. 2010).Since, the supervisors spend an equal come in of time with each employee they supervise, the costs associated with it are fixed, and they do non vary directly with resource usage. Since the building is allocated based on square footage, the costs are variable. There is a direct correlation between amount of space used and the rent. There is also a direct correlation between the Energy or electric power consumed and the number of units produced (Needles et al. 2010).In cost of labour, the costs are variable as they change in direct proportion to the number of units produced. The cost of equipment is fixed and does not vary directly to the units produced. The cost of materials varies in direct proportion to the number of units produced. There is an indirect relationship between amount of supplies and production time. The costs therefore vary in direct proportion to the resource consumption ((Hansen et al.