Question

Classifying Cost Drivers Henderson Construction managers provide design and construction management services for various commercial construction projects. Senior managers are trying to apply cost driver concepts to their firm to better understand Henderson's costs. Classify each of the following actions or decisions as structural, organizational, or activity cost drivers. (a) The decision to be a regional leader in computer-assisted design services. Structural Organizational Activity (b) The decision to allow staff architects to follow a specific project through to completion. Structural Organizational Activity (c) The daily process of inspecting Structural Organizational Activity (d) The process of conducting extensive client interviews to assess the exact needs for Henderson services. Structural Organizational Activity

Answer 1

A- structural

B- organizational

C- Activity

D- Activity

E- Structural

F- Structural

G- Activity

H- Organizational

I- Structural

J- Activity

Activity Cost drivers:- A cost driver affects the cost of specific business activities. In activity-based costing (ABC), an activity cost driver influences the costs of labor, maintenance, or other variable costs.

Structural cost drivers:- Structural cost drivers relate to business strategic
choices about an organization’s underlying economic structure, such as scale and
scope of operations, use of technology and complexity of products.

Organizational cost drivers:- These are the Choices  concerning the organization of activities and the involvement of persons inside and outside the organization in decision making.