determining how costs behave

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1、10DeterminingHowCostsBehaveLearningObjectivesWhatisthevalueoflookingatthepast?Perhapsitistorecallfondmemoriesyou’vehadorhelpyou1.Describelinearcostfunctionsunderstandhistoricalevents.Maybeyourreturntothepastandthreecommonwaysinwhichenablesyoutobetterund

2、erstandandpredictthefuture.Whenantheybehaveorganizationlooksatthepast,ittypicallydoessotoanalyzeits2.Explaintheimportanceofcausalityresults,sothatthebestdecisionscanbemadeforthecompany’sinestimatingcostfunctionsfuture.Thisactivityrequiresgatheringinforma

3、tionaboutcostsand3.Understandvariousmethodsofhowtheybehavesothatmanagerscanpredictwhattheywillbecostestimation“downtheroad.”Gainingadeeperunderstandingofcostbehaviorcanalsospurafirmtoreorganizeitsoperationsin4.Outlinesixstepsinestimatingainnovativewaysan

4、dtackleimportantchallenges,asthefollowingcostfunctionusingquantitativeanalysisarticleshows.5.Describethreecriteriausedtoevaluateandchoosecostdrivers6.Explainnonlinearcostfunctions,inManagementAccountantsatCiscoEmbraceparticularthosearisingfromlearn-ingcu

5、rveeffectsOpportunities,EnhanceSustainability17.BeawareofdataproblemsUnderstandinghowcostsbehaveisavaluabletechnicalskill.encounteredinestimatingcostfunctionsManagerslooktomanagementaccountantstohelpthemidentifycostdrivers,estimatecostrelationships,andde

6、terminethefixedandvariablecomponentsofcosts.Tobeeffective,managementaccountantsmusthaveaclearunderstandingofthebusiness’sstrategyandoperationstoidentifynewopportunitiestoreducecostsandincreaseprofitability.AtCiscoSystems,managementaccountants’in-depthund

7、erstandingofthecompany’scostsandoperationsledtoreducedcosts,whilealsohelpingtheenvironment.Cisco,makersofcomputernetworkingequipmentincludingroutersandwirelessswitches,traditionallyregardedtheusedequipmentitreceivedbackfromitsbusinesscustomersasscrapandr

8、ecycleditatacostofabout$8millionayear.Asmanagerslookedattheaccumulatedcostsandrealizedthattheymayliterallybe“throwingawaymoney,”theydecidedtoreassesstheirtreatmentofscrapmaterial.In2005,managersatCiscobegantryingtofinduses