ADMS 3510 Lecture Notes - Cost Driver, Cost Accounting, Cost Estimate

• School: York University
• Department: Administrative Studies
• Course: ADMS 3510
• Professor: Jamison Aldcorn

Document Summary

Direct cost: control is easy, straightforward due to observable cause effect relationship. Indirect cost: benefit shared unequally among different products. Indirect cost allocation rate use it to predict future moh value. Cost driver rate : cost per unit of benefit received by each distinct type of output from unequal use of shared resources. A single cost pool total that includes many different costs is a heterogeneous cost pool. Goal is to choose a method to use to describe the cost benefit relationship that best reflects the unequal sharing of common moh resources between distinct types of outputs. A linear cost function for moh : x- quantity of benefit received. Curvilinear cost function: data points are joined to form a curve. With x axis for activity level and y axis for the cost. Correlation: relation between two or more variables- change in one quantity that explains but does not cause changes in another quantity.