The company of interest is Dell. Dell Technologies is a global leader in end-to-end technology provision whose comprehensive portfolio is mainly IT hardware, software, and service solutions. Based on the 2019 financial statement, Dell's cost of operations was $25 million (Korsmo & Mayers, 2020). There were also raw materials at $1007 M and work in progress at $527M. A cost behavior analysis is crucial to Dell Technologies management based on these cost components of operation costs. At its core, cost behavior analysis is the study of how a business should respond to changes in the company's level of activities. Cost behavior analysis is crucial as it helps management plan its activities, respond to the changes, and choose the kind of actions to choose (Hosomi & Nagasawa, 2018). Generally, the cost behavior analysis can facilitate implementing a plan for the company’s operations and applies to all types of businesses to manage crucial activities.
Notably, cost analysis is crucial for decision-making. Usually, costs are classified as fixed or variable. The classification is crucial for the management to decide whether to buy or make, select paper product mix, capacity decision, operate or close (Weiss, 2010). Therefore, cost behavior analysis is crucial for Dell to ascertain costs, plan for profit, control costs, and the process of decision -making. Cost behavior analysis is also important for controlling the budget. Furthermore, the classification into variable and fixed is a prerequisite. The flexibility will allow Dell to change its budget to the supposed level, hence aligning it to its goals and objectives.
Delegate your assignment to our experts and they will do the rest.
References
Hosomi, S., & Nagasawa, S. (2018). An empirical study on asymmetric cost behavior: analysis of the sticky costs of local public enterprises. Asia-Pacific Management Accounting Journal (APMAJ) , 13 (2), 55-82.
Korsmo, C., & Myers, M. (2018). The Flawed Corporate Finance of Dell and DFC Global. Emory LJ , 68 , 221.
Weiss, D. (2010). Cost behavior and analysts’ earnings forecasts. The Accounting Review , 85 (4), 1441-1471.
