Scientific Papers


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ISSN: 2306-3483 (Online), 2071-8330 (Print)

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Analysis of overhead cost behavior: case study on decision-making approach

Vol. 10, No 1, 2017


Petr Novák


Tomas Bata University in Zlín
Czech Republic



Analysis of overhead cost behavior: case study on decision-making approach


Ján Dvorský


Tomas Bata University in Zlín
Czech Republic



Boris Popesko


Tomas Bata University in Zlín
Czech Republic

Jiří Strouhal


Škoda Auto University
Czech Republic




Abstract. Cost management is one of the most significant issues in company performance and company financial management which any enterprise has to solve as in the periods of declines of sales revenues, as well as during their growth. In this study we designed and tested several regression models that could be suitable for cost behavior prediction and subsequent decision-making based on these predictions. We used multiple linear regression models with a point estimate and with interval estimate of the model parameters. Comparison of regression models of cost behavior and their reliability was carried out due to the quality of the data collected for the case of basic and adjusted data. The overheads were divided into several groups of relevant costs and their dependences were examined on different factors other than only the production volume using the correlation matrix. From the results of the transformed model we believe that asymmetric cost behavior is affected by asymmetric behavior of the chosen factors. As the final one was intended the model representing the change in costs in time shifting about one-month period. This model can be used for examining costs in time shift by a short period (e.g., months) and thus it is possible to prove cost asymmetric behavior called "sticky costs". We used the model adjusted in accordance with Anderson et al. (2003). and we kept the model clearly transformed and assembled so that there remained only those variables that had a statistically significant effect on the dependent variable. The limitations of these models were also defined. Finally, graphical analyses of deviations were performed to find similarities in cost through cost centres and through the examined periods.


Received: November, 2016

1st Revision: March, 2017

Accepted: April, 2017


DOI: 10.14254/2071-8330.2017/10-1/5


JEL Classification: D70 

Keywords: cost management, cost behavior, regression analysis, asymmetric cost behavior, decision-making process, overhead costs, sticky costs