• Journal of the Korea Convergence Society
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• v.11 no.1
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• pp.259-266
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• 2020

This study analyzes the effects of the obsolescence assets on the asymmetry of costs. Cost asymmetry refers to a lower percentage of costs when sales fall than increases in costs when sales increase. the obsolescence asset induces various decisions, including high maintenance costs and management improvements and replacement of facilities. This study is to analyze the cost behavior according to those decisions. The analysis showed that the higher the obsolescence of assets rate, we found cost elasticity, with a greater reduction in costs when sales decrease than the increase in costs when sales increase. Second, the lower the cost will not appear as the obsolescence of assets rate increases in case that the concentration of an item of property, plant and equipment is high, and when sales decrease. The above result means that the obsolescence of assets rate acts as operating risk and thus operates resources flexibly according to changes in sales, but when the concentration of property, plant and equipment is high, the decision-making constraint make it difficult for the flexible operation.