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For example, if an HR department was removed then basic employment functions and essential business processes cannot be performed which will affect the firm's profit negatively. [8] Management efficiency – Managers compare cost data from different time periods in order to see whether the cost centre is becoming more or less profitable.
The input of production factors, the choice of the form of production organisation and the determination of the product structure can all be analysed and decided by creating mathematical models. Cost decision. Cost is a factor that directly affects profit, and is one of the most important concerns for enterprise development.
Following strong initial uptake, ABC lost ground in the 1990s compared to alternative metrics, such as Kaplan's balanced scorecard and economic value added.An independent 2008 report concluded that manually driven ABC was an inefficient use of resources: it was expensive and difficult to implement for small gains, and a poor value, and that alternative methods should be used. [4]
Cost function. In economics, the cost curve, expressing production costs in terms of the amount produced. In mathematical optimization, ...
In economics, a cost function represents the minimum cost of producing a quantity of some good. The long-run cost curve is a cost function that models this minimum cost over time, meaning inputs are not fixed. Using the long-run cost curve, firms can scale their means of production to reduce the costs of producing the good. [1]
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 ...
Cost accounting provides the detailed cost information that management needs to control current operations and plan for the future. [2] Cost accounting information is also commonly used in financial accounting, but its primary function is for use by managers to facilitate their decision-making.
A cost-sharing problem is defined by the following functions, where i is an agent and S is a subset of agents: Value(i) = the amount that agent i is willing to pay in order to enjoy the service. Cost(S) = the cost of serving all and only the agents in S. E.g., in the above example Cost({Alice,George})=9000.