Cost Drivers of Manufacturing Overhead: A Cross-Sectional Analysis of Automobile Component Manufacturing Plants

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Ahn, Taesik
Issue Date
College of Business Administration (경영대학)
Seoul Journal of Business, Vol.4 No.2, pp. 71-96
Cost Drivers of OverheadCost Behavior Estimation ModelsProduction Complexity to Activities
This paper tested whether volume and complexity-driven support

activity drivers are significant in explaining variation of overhead. Data

used include cost and activity data for the 74 automobile component

manufactunng plants. Each of volume and support achwty variables

showed sigmfnmt marginal contnbuhon to the explanahon of overhead

vanation Thls result supports the assumphons of both tradihonal and

ABC systems suggestmg that both volume and support achvlty dnvers

are useful for cost allocation and cost management purposes Among

the support activities, process balancing activihes, purchasing control

activities, and change actiwhes showed significant posltive effects on

manufacturing overhead

The higher level of tests showed that selected structural complexlty

variables explain the variation of support activlty drivers, especially

process balancing, purchasing control and change activities This

result partly supports the notion that structural production complexlty

drivers have significant Influence on the level of support activities We

may conclude that cost management should be considered from a

strategic vlewpomt as well as from an operabon management viewpoint.
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College of Business Administration/Business School (경영대학/대학원)Dept. of Business Administration (경영학과)Seoul Journal of BusinessSeoul Journal of Business Volume 04, Number 2 (1998)
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