Cost Hierarchy: Evidence and Implications
Cost Hierarchy: Evidence and Implications
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Keywords

cost hierarchy
activity based costing
cost drivers
cost allocation
manufacturing overhead costs

Abstract

Empirical evidence on the association between overhead costs and non-volume related cost drivers is mixed Anderson and Sedatole 2013 offer possible explanations for the lack of evidence and find that the cost hierarchy is descriptive of the association between resource consumption and production activity In this paper we provide evidence on the presence of the cost hierarchy by studying the behavior of indirect production labor costs using daily data for five years from seven production departments of an industrial equipment manufacturer
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