Transcription of Cost Allocation and Activity-Based Costing Systems
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Cost Allocation and Activity-Based Costing Systems
5 Cost Allocation andActivity-Based CostingSystemsCost Allocation andActivity-Based CostingSystemsLEARNING OBJECTIVESA fter studying this chapter, you will be able the major purposes for allocating the relationship between activities, resources, costs, and cost recommended guidelines to charge the variable and fixed costs of servicedepartments to other organizational Identify methods for allocating the central costs of an the direct, step-down, and reciprocal Allocation methods to allocate servicedepartment costs to user Describe the general approach to allocating costs to products or Use the physical units and relative-sales-value methods to allocate joint costs to Activity-Based Costing to allocate costs to products or the steps involved in the design and implementation of activity.
cost allocation for legal or internal auditing services or internal man-agement consulting services because top management wants to encourage their use. In other organizations there is a cost allocation for such items to spur managers to make sure the benefits of the specified services exceed the costs. 2. To compute income and asset valuations.
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