Cost Behavior & Flexible Budgeting
Two questions to be answered. #2 trying to put yourself as a FedEx sales AE selling a service of transportation to businesses.
This week’s material focused on understanding and modeling costs based on cost behavior: fixed and variable. Please share an experience you had in trying to separate or perhaps assemble costs in this manner (i.e., by cost behavior) to help support your decision-making process? Was this information simple to assemble or extract from the data you are normally provided? If not, how did you get the information?
That said, it would be great if you could make this more personalized for your sales job at FedEx. Can you identify a cost object YOU deal with on a regular basis as a FedEx Sales rep, identify a few direct and indirect costs associated with that object, and an allocation basis? As it relates to Sales at FedEx, My example in my career is: I work in Pet Care at P&G and could suggest in my case: a good cost object is Iams Dry Dog Food. There are direct costs like bags, kibbles, and stretch wrap in production. There are indirect costs like my Pet Care Sales force! Even though they are Direct costs for Pet Care, they are indirect in my example Iams Dry Dog Food cost object (they sell Iams and Eukanuba, and dry/wet food, and Cat/Dog food…so they directly work on Pet Care but are indirect for this narrower segment). I would allocate the Pet Care Sales force based on estimated annual sales of total Pet Care (so a % of Sales in my vernacular).