Revenue Drivers And Cost Drivers

The cost drivers revenue drivers and value chain analysis in strategic management accounting january 2009 international journal of knowledge culture and change management 9 2 69 77.

Revenue drivers and cost drivers. Activity cost drivers are used in activity based costing and they give a more accurate determination of the true cost of business. 1 price 2 variable costs i e. Every cost in your business model can be correlated to one of five main cost drivers or factors that determine how much the cost is. Gross asset value gav is the sum of value of property a company owns.

This is where cost drivers come in. For most businesses there are four major profit drivers. In other words nav. Net asset value nav is one of the most commonly used valuation indices.

Those costs that vary in direct proportion to revenue typically represented by cost of sales 3 fixed costs or overhead and 4 sales volume. Revenue per se is an extremely important line item in modeling. A rigor in revenue build up also ensures a rigor in costs projections. It is the value of an entity s assets minus the value of its liabilities divided by the number of total outstanding investment units.

Revenue and cost drivers are what really define the business model. Cost drivers for the clinic include staff labor costs administrative costs and facility costs. Whatever determines the total cost of a particular activity should be analyzed in depth to ensure that a proper allocation base is used. Kpi revenue and cost drivers.

Cost drivers follow a cause effect relationship and if the relationship cannot be established then a more relevant driver should be looked for. Anonymous a asked on oct 21 2018 2 answers i m stuck of thinking of ways to increase revenues and decrease costs for each of the major industries covered in cases e g cpg tech pharma etc. Significance of cost drivers in cost accounting. A cost driver is a unit that derives the expenses and sets a basis on which a particular cost is to be allocated between the different departments and on the basis of that driver s activity completed in that particular period the cost is allocated.

An activity cost driver is a component of a business process. Help with revenue and cost drivers. For example revenue drivers for an outpatient clinic include the number of people receiving services the type of services delivered and the amount charged for delivering services.