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Basis of cost drivers identification
Activity cost pools are the source which determines cost drives. There are different basis on which cost drives are identified. They are as follows:
This type of cost driver is based on units of work. The cost of increasing activity as a result of change in volume and more units being processed is discussed under this type.
Here the amount charged as a result of the entire activity is placed on the object of cost. An example to better understands this type is when, modification costs of a product are charged to the end-product price.
Identifying cost drivers assignment help deals the classification of cost drives based on time. The time taken to complete a certain activity is the basis of the cost drive.
The method of drive applied depends solely on the nature of the activity performed. Out of the three bases provided, charge is rarely applied. It is not compulsory that one distinct type will determine driver cost. In practice two methods can be combined to come up with this value.
Time and volume can both determine driver cost. In a situation where the length of time taken for production as well as the number of items produced are on the rise, both these criteria will help determine the final drive cost. Our manuals as identifying cost drivers assignment help assist pupils in need of help regarding these concepts.
Measuring cost drivers
Determining the method in which the cost drivers will be identified is not enough. The activities must be measured. The activity of the driver must be measured corresponding to the time period in which the costs were captured.
When there are confusions regarding the method of measurement of cost drivers, then existing systems can be taken as examples. If assumed that the driver for purchasing process is purchasing orders then capturing costs can be simplified.
Using modern technology can make the process of keeping records much simpler. When the product quantity and cost drivers are to be found out, using technology like computer imputed data helps making decisions easier. Use identifying cost drivers homework help from our end in case of any troubles regarding the assignment.
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