BU247 Lecture Notes - Deutsche Luft Hansa, Gross Margin, Cost Driver
Document Summary
Capacity-related resource cost depends on amount of resource capacity that is acquired. Direct cost cost that is uniquely and unequivocally to a single cost object. Indirect cost cost that fails the test of being direct. Accumulate similar things for example one for fixed and one for variable cost. Looks for stability and predict the cost rate. Knowing you cannot run 100% of the time. Important to design the cost pool the best they can. High demand and base on lower actual price would be decrease. Low demand and cost driver rate increase price would increase = death spiral. Maintain machine properly to make it last longer, but would need to consider the time for maintenance. Need to consider the set up time for material. Using practical capacity to relate to the best estimation. *pick assembly line as cost driver rate on exam since direct labour hour and machine hour is 1000 hour apart.