Describe a variable, fixed, mixed and step cost in an organization. Would this organization be more likely to benefit from using a manufacturing cost hierarchy or a customer cost hierarchy for determining cost drivers? Why? Identify a cost in each of the four cost hierarchies.
National Linen launders commercial tablecloths, bedding, garments and rags for restaurants, medical facilities, hotels and auto repair shops. Costs that fit each of the categories include:
Variable: laundry soap, water, folding labor
Fixed: plant rent, IT cost
Mixed: utilities at the plant, fleet maintenance
Step: supervision labor; number of delivery trips
The firm is more likely to benefit from ...
Your discussion is 257 words and describes a commercial laundry firm, explaining why customer cost would be a better hierarchy for them.