Identify cost drivers

There would not be only one cost driver for different overhead. There are no of cost droiver.

IT industry is a service industry u ve to make  broad classification of services which the company is providing.

Now how will u do it.

Take past 2 years data,Classify the services which the company offers.

There Allocate the over head based on ABC as the name suggests activity based costing .

however for general overheads like salary,Finance cost etc...u can allocate it based on generic method.

Originally posted by : chandan
	There would not be only one cost driver for different overhead. There are no of cost droiver.

thanks. can u please give me some suggestions?

Originally posted by : Deepak
	IT industry is a service industry u ve to make  broad classification of services which the company is providing. Now how will u do it. Take past 2 years data,Classify the services which the company offers. There Allocate the over head based on ABC as the name suggests activity based costing . however for general overheads like salary,Finance cost etc...u can allocate it based on generic method.

can u give me some suggestions to start with? For example, what could be the cost drivers for Internet Bandwidtth Charges or Leased Line Charges?

some of the services the company offers are:

colocation services, internet bandwidtth, storage services, cloud computing  and mailing services.

Originally posted by : jrmchess
	Originally posted by : Deepak IT industry is a service industry u ve to make  broad classification of services which the company is providing. Now how will u do it. Take past 2 years data,Classify the services which the company offers. There Allocate the over head based on ABC as the name suggests activity based costing . however for general overheads like salary,Finance cost etc...u can allocate it based on generic method.   can u give me some suggestions to start with? For example, what could be the cost drivers for Internet Bandwidtth Charges or Leased Line Charges?

Boss ur problem is u r focusing too much on cost drivers...unless u knw the service to wat u r gonna allocate the cost.

Anyhow internet charges could be allocated based on how much internet each service is consuming,

For a layman like me  cost driver would be time of internet consumed by each service.

if u get hold of services,ull certainly get to knw wat are the cost drivers associated wit it.