Mẹo Which of the following allocation methods recognizes all interactions of support departments?
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Nội dung chính - Which of the following is the most accurate method of support department cost allocations?Which method of support department allocation fully considers the relationship between the support departments?What methods can managers use to allocate costs of multiple support departments to operating departments?What are the 3 allocation methods?
Support Department Cost Allocation125
CHAPTER 6
Support Department Cost Allocation
LEARNING OBJECTIVES
After studying this chapter, you should be able to:
1.Describe the difference between support departments and producing departments.
2.Explain five reasons why support costs may be assigned to producing departments.
3.Calculate charging rates, and distinguish between single and dual charging rates.
4.Allocate support center costs to producing departments using the direct method, the sequen-
tial method, and the reciprocal method.
5.Calculate departmental overhead rates.
CHAPTER SUMMARY
This chapter first differentiates support departments from producing departments. The costs of
support departments are common to all producing departments and must be allocated to them to
satisfy many important objectives. Given that the causal factors can differ for fixed and variable
costs, a dual rate charging method is preferred to allocate the variable and fixed costs separately.
Three methods are introduced to recognize various degrees of support department interaction
considered. While the direct method allocates support department costs only to the producing de-
partments, the sequential method and the reciprocal method allocate support service costs
among some (or all) interacting support departments before allocating costs to the producing de-
partments. Upon allocating all support department costs to producing departments, an overhead
rate can be computed for each producing department in order to determine the product’s unit
cost.
CHAPTER REVIEW
I.An Overview of Cost Allocation
Cost allocation is required to assign common resource costs to cost objects or common
costs. Common costs occur when the same resource is used in the output of two or more
services or products.
Allocation is a means of dividing a pool of costs and assigning it to various subunits. Thus,
allocation does not affect the amount of total costs.
A.Cost allocation procedures include the following steps:
1.Departmentalize the firm and classify each department as a support department or
a producing department.
Learning Objective #1
Which of the following is the most accurate method of support department cost allocations?
The reciprocal method of support department cost allocation is the most precise method and therefore is used most often.Which method of support department allocation fully considers the relationship between the support departments?
The reciprocal (allocation) method allocates support-department costs to operating departments by fully recognizing the mutual services provided among all support departments.What methods can managers use to allocate costs of multiple support departments to operating departments?
Three methods can be used to allocate support department costs: the direct, sequential, and reciprocal methods. In determining which support department cost allocation method to use, companies must: Determine the extent of support department interaction. Weigh the costs and benefits associated with each method.What are the 3 allocation methods?
C. There are three methods commonly used to allocate support costs: (1) the direct method; (2) the sequential (or step) method; and (3) the reciprocal method. Many instructors choose to defer coverage of the reciprocal method to cost accounting. Tải thêm tài liệu liên quan đến nội dung bài viết Which of the following allocation methods recognizes all interactions of support departments?
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