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Cost Driver
According to the most simple definition, a cost driver is the unit of an activity that causes a change in the activity's cost: A different meaning is assigned to the term by Michael Porter: "cost drivers are the structural determinants of the cost of an activity, reflecting any linkages or interrelationships that affect it". This defines 'cost drivers' not just as a simple ''variable in a function'', but as something that ''changes the function'' itself. For example, the driver 'economy of scale' leads to different costs per unit for different scales of operation (a small cargo vessel is more expensive per unit than a large bulk carrier), and the driver 'capacity utilisation' leads to greater costs per unit if the capacity is uder-utilised and lower costs per unit is the utilisation is high. 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 ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Chartered Institute Of Management Accountants
The Chartered Institute of Management Accountants (CIMA) is the global professional management accounting body based out of the UK. CIMA offers training and qualification in management accountancy and related subjects. It is focused on accountants working in the industry and provides ongoing support and training for members. CIMA is one of the member of professional associations for accountants in the UK and Ireland. Its particular emphasis is on developing the management accounting profession. CIMA is the largest and the oldest management accounting body in the world with 115,000 members and 6,500 CGMA students in 2020. CIMA is also a member of the International Federation of Accountants. The Chartered Global Management Accountant ( CGMA) qualification has the academic standing of a master's degree in the United Kingdom (Level 7 by NARIC) History CIMA was formed in March 1919, as the Institute of Cost and Works Accountants, by a group of legal professionals and businessmen ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Michael Porter
Michael Eugene Porter (born May 23, 1947) is an American academic known for his theories on economics, business strategy, and social causes. He is the Bishop William Lawrence University Professor at Harvard Business School, and he was one of the founders of the consulting firm The Monitor Group (now part of Deloitte) and FSG, a social impact consultancy. He is credited for creating Porter's five forces analysis, which is instrumental in business strategy development at present. He is generally regarded and hailed as the father of the modern strategy field. He is also regarded as one of the world's most influential thinkers on management and competitiveness as well as one of the most influential business strategists the world has ever seen. He is the most sought after research scholar and his work has been highly recognised by governments, non governmental organisations and universities. Early life Michael Porter's father was a civil engineer and Georgia Tech graduate who had go ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Activity Based Costing
Activity-based costing (ABC) is a costing method that identifies activities in an organization and assigns the cost of each activity to all products and services according to the actual consumption by each. Therefore, this model assigns more indirect costs ( overhead) into direct costs compared to conventional costing. CIMA, the Chartered Institute of Management Accountants, defines ABC as an approach to the costing and monitoring of activities which involves tracing resource consumption and costing final outputs. Resources are assigned to activities, and activities to cost objects based on consumption estimates. The latter utilize cost drivers to attach activity costs to outputs. The Institute of Cost & Management Accountants of Bangladesh (ICMAB) defines activity-based costing as an accounting method which identifies the activities which a firm performs and then assigns indirect costs to cost objects. Objectives With ABC, a company can soundly estimate the cost elements o ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Indirect Cost
Indirect costs are costs that are not directly accountable to a cost object (such as a particular project, facility, function or product). Like direct costs, indirect costs may be either fixed or variable. Indirect costs include administration, personnel and security costs. These are those costs which are not directly related to production. Some indirect costs may be overhead, but other overhead costs can be directly attributed to a project and are direct costs. There are two types of indirect costs. One are the fixed indirect costs, which are unchanged for a particular project or company, like transportation of labor to the working site, building temporary roads, etc. The other are recurring indirect costs, which repeat for a particular company, like maintenance of records or the payment of salaries. Indirect vs direct costs Most cost estimates are broken down into direct costs and indirect costs. Direct costs are directly attributable to the object. In construction, the costs o ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Variable Costs
Variable costs are costs that change as the quantity of the good or service that a business produces changes.Garrison, Noreen, Brewer. Ch 2 - Managerial Accounting and Costs Concepts, pp 48 Variable costs are the sum of marginal costs over all units produced. They can also be considered normal costs. Fixed costs and variable costs make up the two components of total cost. Direct costs are costs that can easily be associated with a particular cost object.Garrison, Noreen, Brewer. Ch 2 - Managerial Accounting and Costs Concepts, pp 51 However, not all variable costs are direct costs. For example, variable manufacturing overhead costs are variable costs that are indirect costs, not direct costs. Variable costs are sometimes called unit-level costs as they vary with the number of units produced. Direct labor and overhead are often called conversion cost,Garrison, Noreen, Brewer. Ch 2 - Managerial Accounting and Costs Concepts, pp 39 while direct material and direct labor are often ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Capacity Utilization
Capacity utilization or capacity utilisation is the extent to which a firm or nation employs its installed productive capacity. It is the relationship between output that ''is'' produced with the installed equipment, and the potential output which ''could'' be produced with it, if capacity was fully used. The Formula is the actual output per period all over full capacity per period expressed as a percentage. Engineering and economic measures One of the most used definitions of the "capacity utilization rate" is the ratio of actual output to the potential output. But potential output can be defined in at least two different ways. Engineering definition One is the "engineering" or "technical" definition, according to which potential output represents the maximum amount of output that can be produced in the short run with the existing stock of capital. Thus, a standard definition of capacity utilization is the (weighted) average of the ratios between the actual output of firms and t ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Value Chain
A value chain is a progression of activities that a firm operating in a specific industry performs in order to deliver a valuable product (i.e., good and/or service) to the end customer. The concept comes through business management and was first described by Michael Porter in his 1985 best-seller, ''Competitive Advantage: Creating and Sustaining Superior Performance''. The concept of value chains as decision support tools, was added onto the competitive strategies paradigm developed by Porter as early as 1979. In Porter's value chains, Inbound Logistics, Operations, Outbound Logistics, Marketing and Sales, and Service are categorized as primary activities. Secondary activities include Procurement, Human Resource management, Technological Development and Infrastructure . According to the OECD Secretary-General the emergence of global value chains (GVCs) in the late 1990s provided a catalyst for accelerated change in the landscape of international investment and trade, wit ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Charles T
Charles is a masculine given name predominantly found in English and French speaking countries. It is from the French form ''Charles'' of the Proto-Germanic name (in runic alphabet) or ''*karilaz'' (in Latin alphabet), whose meaning was "free man". The Old English descendant of this word was '' Ċearl'' or ''Ċeorl'', as the name of King Cearl of Mercia, that disappeared after the Norman conquest of England. The name was notably borne by Charlemagne (Charles the Great), and was at the time Latinized as ''Karolus'' (as in ''Vita Karoli Magni''), later also as '' Carolus''. Some Germanic languages, for example Dutch and German, have retained the word in two separate senses. In the particular case of Dutch, ''Karel'' refers to the given name, whereas the noun ''kerel'' means "a bloke, fellow, man". Etymology The name's etymology is a Common Germanic noun ''*karilaz'' meaning "free man", which survives in English as churl (< Old English ''ċeorl''), which developed its depr ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Srikant Datar
Srikant Datar is an Indian-American economist and the Dean of Harvard Business School. At Harvard, he concurrently serves as the Arthur Lowes Dickinson Professor of Business Administration. In 2021, he was awarded the Padma Shri, the fourth-highest civilian award in India. Early life Datar attended the Cathedral and John Connon School in Mumbai. He graduated with distinction in mathematics and economics from St. Xavier's College, Mumbai, St. Xavier's College, University of Mumbai in 1973. At IIM Ahmedabad, he was a gold medalist and the General Secretary of the Student's Council (1977–78). He is a chartered accountant and holds two master's degrees and a doctorate from Stanford University. Career Since 2015, he has been faculty chair of the Harvard Innovation Labs and Senior Associate Dean for University Affairs at Harvard Business School. He is a member of the boards of directors of ICF International, Stryker Corporation, and T-Mobile US, all in the US, and of IIM Calcutt ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Activity-based Costing
Activity-based costing (ABC) is a costing method that identifies activities in an organization and assigns the cost of each activity to all products and services according to the actual consumption by each. Therefore, this model assigns more indirect costs ( overhead) into direct costs compared to conventional costing. CIMA, the Chartered Institute of Management Accountants, defines ABC as an approach to the costing and monitoring of activities which involves tracing resource consumption and costing final outputs. Resources are assigned to activities, and activities to cost objects based on consumption estimates. The latter utilize cost drivers to attach activity costs to outputs. The Institute of Cost & Management Accountants of Bangladesh (ICMAB) defines activity-based costing as an accounting method which identifies the activities which a firm performs and then assigns indirect costs to cost objects. Objectives With ABC, a company can soundly estimate the cost elements o ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Fixed Cost
In accounting and economics, 'fixed costs', also known as indirect costs or overhead costs, are business expenses that are not dependent on the level of goods or services produced by the business. They tend to be recurring, such as interest or rents being paid per month. These costs also tend to be capital costs. This is in contrast to variable costs, which are volume-related (and are paid per quantity produced) and unknown at the beginning of the accounting year. Fixed costs have an effect on the nature of certain variable costs. For example, a retailer must pay rent and utility bills irrespective of sales. As another example, for a bakery the monthly rent and phone line are fixed costs, irrespective of how much bread is produced and sold; on the other hand, the wages are variable costs, as more workers would need to be hired for the production to increase. For any factory, the fix cost should be all the money paid on capitals and land. Such fixed costs as buying machines and la ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Variable Cost
Variable costs are costs that change as the quantity of the good or service that a business produces changes.Garrison, Noreen, Brewer. Ch 2 - Managerial Accounting and Costs Concepts, pp 48 Variable costs are the sum of marginal costs over all units produced. They can also be considered normal costs. Fixed costs and variable costs make up the two components of total cost. Direct costs are costs that can easily be associated with a particular cost object.Garrison, Noreen, Brewer. Ch 2 - Managerial Accounting and Costs Concepts, pp 51 However, not all variable costs are direct costs. For example, variable manufacturing overhead costs are variable costs that are indirect costs, not direct costs. Variable costs are sometimes called unit-level costs as they vary with the number of units produced. Direct labor and overhead are often called conversion cost,Garrison, Noreen, Brewer. Ch 2 - Managerial Accounting and Costs Concepts, pp 39 while direct material and direct labor are often r ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
