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Apr 14, 2020 The primary drivers of globalization are rapid advancements in technology, culture, economics and politics. With each passing year, the speed at which transactions take place and the spreading influence of cultural forces serve to integrate international societies. The most prominent driver of this trend is the advancement of technology. Jan 21, 2019 Watch on as we take you through the DRIVERS or FACTORS that increase globalisation. We focus on five specific drivers: Trade in goods and services Financial flows Investment and transnational. May 04, 2017 A cost driver triggers a change in the cost of an activity.The concept is most commonly used to assign overhead costs to the number of produced units. It can also be used in activity-based costing analysis to determine the causes of overhead, which can be used to minimize overhead costs. Examples of cost drivers are as follows. May 10, 2020 For example; formerly a call from New York to London cost around $244. However today it just takes almost $3. Internet and faxes have further reduced the communication costs. Many people say that the growth of globalization is now complete and that there can be no further changes made in the global economy.
Jump to navigationJump to searchA cost driver is the unit of an activity that causes the change in activity's cost.
cost driver is any factor which causes a change in the cost of an activity
'Cost drivers are the structural determinants of the cost of an activity, reflecting any linkages or interrelationships that affect it'.[1] Therefore we could assume that the cost drivers determine the cost behavior within the activities, reflecting the links that these have with other activities and relationships that affect them. Delphi ds150e 2013 software, free download.
The Activity Based Costing (ABC) approach relates indirect cost to the activities that drive them to be incurred. Activity Based Costing is based on the belief that activities cause costs and therefore a link should be established between activities and product. The cost drivers thus are the link between the activities and the cost.
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Generally, the cost driver for short term indirect variable costs may be the volume of output/activity; but for long term indirect variable costs, the cost drivers will not be related to volume of output/activity.
In traditional costing the cost driver to allocate indirect cost to cost objects was volume of output. With the change in business structures, technology and thereby cost structures it was found that the volume of output was not the only cost driver. John Shank and Vijay Govindarajan list cost drivers into two categories:[2]Structural cost drivers that are derived from the business strategic choices about its underlying economic structure such as scale and scope of operations, complexity of products, use of technology, etc., andExecutional cost drivers that are derived from the execution of the business activities such as capacity utilization, plant layout, work-force involvement, etc.Resource cost Driver is measure of quantity of resources consumed by an activity. It is used to assign cost of a resource to activity or cost pool.Activity Cost Driver is measure of frequency and intensity of demand placed on activities by cost object. It is used to assign activity costs to cost objects.
To carry out a value chain analysis, ABC is a necessary tool. To carry out ABC, it is necessary that cost drivers are established for different cost pools.
Examples Of Cost Drivers In Globalization 2016
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Examples[edit]
Some examples of indirect costs and their drivers are: indirect costs for maintenance, with the possible driver of this cost being the number of machine hours; or, the indirect cost of handling raw-material cost, which may be driven by the number of orders received; or, inspection costs that are driven by the number of inspections or the hours of inspection or production runs. In marketing, cost drivers are Number of advertisements, Number of sales personnel etc. In Customer service, cost drivers are Number of service calls attended, number of staff in service department, number of warranties handled, Hours spent on servicing etc.
References[edit]
- ^'Competitive Advantage', by Michael Porter
- ^Strategic Cost Management: The New Tool for Competitive Advantage by Shank and Govindarajan
5 Major Drivers Of Globalization
- “Cost Accounting: a managerial emphasis”, 12th Edition (2005) by Charles T. Horngren, George Foster and Srikant Datar
See also[edit]
Key Drivers Of Globalization
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