Thursday, 14 February 2013

Cost Benefit Analysis


By on 01:20

Cost Benefit Analysis is the procedure or a tool which is used to find the effectiveness of the system/project.It give the image of various cost and benefits.The main aim of cost benefit analysis is that to determined whether are system is financially good or not.

Problem with Cost Benefit Analysis:-

1)Valuation problem.
2)Completeness problem.
3)Distortion problem.

Types of Cost benefit analysis:-

1)Tangible cost and Intangible cost:-Tangible cost are those cost which are associated with information system and which are determined in advance(Example cost of workers,hardware etc.).

Intangible cost are those cost which are associated with information system but can not be determined in advance(Example loss of goodwill,breakdown cost etc.).

2)Fixed cost and Variable cost:- Fixed cost are those cost which are not changed(Example cost of h/w).

Variable cost are those cost which are not fixed(means which are change in according to duration of time).

3)Direct and Indirect cost:-Direct cost are those cost which are directly linked with the project(Example cost of rent).

Indirect cost are those cost which are not directly associated with the system(Example cost of insurance).

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