costacctg13e_ppt_ch15

costacctg13e_ppt_ch15 - CHAPTER 15 CHAPTER 15 Allocation of...

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Unformatted text preview: CHAPTER 15 CHAPTER 15 Allocation of Support Department Costs, Common Costs, and Revenues Allocating Costs of a Supporting Department to Operating Departments Supporting (Service) Department provides the services that assist other internal departments in the company Operating (Production) Department directly adds value to a product or service Methods to Allocate Support Department Costs Single-rate method allocates costs in each cost pool (service department) to cost objects (production departments) using the same rate per unit of a single allocation base No distinction is made between fixed and variable costs in this method Methods to Allocate Support Department Costs Dual-Rate method segregates costs within each cost pool into two segments: a variable-cost pool and a fixed-cost pool. Each pool uses a different cost- allocation base Allocation Method Tradeoffs Single-Rate method is simple to implement, but treats fixed costs in a manner similar to variable costs Dual-Rate method treats fixed and variable costs more realistically, but is more complex to implement Allocation Bases Under either method, allocation of support costs can be based on one of the three following scenarios: Budgeted overhead rate and budgeted hours Budgeted overhead rate and actual hours Actual overhead rate and actual hours Choosing between actual and budgeted rates: budgeted is...
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This note was uploaded on 02/23/2010 for the course ACCT 81802 taught by Professor Ognibene during the Fall '09 term at CSU San Bernardino.

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costacctg13e_ppt_ch15 - CHAPTER 15 CHAPTER 15 Allocation of...

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