Identify cost drivers

Hi I am doing a class project on ABC analysis. I am trying to identify cost drivers for an IT company specializing in cloud computing. The costs are mentioned below. I just want to know how to identify them. Thanks for your help in advance.

 

 

Internet Bandwidtth Charges
Leased Line Charges 
Leased Line Charges
DG Hire Charges
DG running Expenses
Electricity Charges - Main Supply
Salaries & Allowances
Bonus
Staff Welfare
Training & Development
AMCs and Facility Repairs & Maintenance 
Hardware Purchases
Hosting Fees
Physical Security Costs
Purchase of Services
Software Usage / Licenses
Facility (Data centres) Rents
Operating lease of IT equipment
Electricity / Water Charges
Insurance
Other administrative Expenses
Telephone Expenses & Mobile Reimbursement
Salaries & Allowances
Recruitment Costs
Relocation Costs
Bonus
Co. leased accomodation
Staff Welfare
Training & Development
Professional Costs - Accounts, Finance, Legal
Professional Costs - Business Development
Professional Costs - HR
Professional Costs - Service Operations
Provision for Bad debt
Office Rent
Marketing Costs
Others sales costs
Domestic Travel
Local Conveyance
Overseas Travel

 

Replies (6)

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.

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