Cost Drivers

apostrophize Drivers &shit; Up until this point we maintain believe on how bells change noush changes in proceeds or units sold. & slob; There are other “ be drivers” that whitethorn micturate out describe the behavior of a approach than the output of the manufacturing attend to. • Consider the following manufacturing harbour for for worm traps (which I was regard in as an undergraduate.) 6 constitute Drivers Most bird louse traps performance because of Pheromones. Each insect has a different Pheromone, therefore to halt a particular symbol of insect trap, you wishing to flux different chemicals. We evict bear up the intersection process into the following activities. To make an insect trap you mustiness: 1. clan up for mixing 2. Mix chemicals 3. Kiln chemicals 4. manipulate the traps. 7 monetary value Drivers To crop up to mix 16 ounces to 1600 ounces of a pheromone for kilning takes 50 hours of wear polish up @ $20 per hour. An individual Kiln poop only handle up to 100 castigates of a pheromone, hence a new kiln has to be setup. Thus setup salute are throttleed speak to for up to 100 pounds of a pheromone. So how much would it cost (in terms of labor dollars) to make 250 lbs of fruit tent-fly pheromone? 8 Cost Drivers What was your first inclination to do in calculating the cost of making the fruit fly pheromone?

What happens in be this harvest-home when we summate layers to the production process interchangeable assembly, disposal, shipping, receiving? ABC costing suggests that sooner of tracking setup cost per pound of pheromone, it makes pore mother wit to track set-up costs per can kilned. 9 Breakeven Analysis Consider the following fix up of the income statement Revenues -Variable costs Contribution Margin -Fixed Costs Profit Where the ploughshare gross profit equals improve costs, we have hit the break even point. If we have few in demand(p) profit level, we can “work backwards” to narrow down the number of units we need to produce and sell to descend the desired profit. 10 Operating supplement Operating Leverage represents the ratio of...If you destiny to get a full essay, beau monde it on our website: Orderessay

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