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Unformatted text preview: incremental costs should be charged. 2. Proponents of alternative (2) argue that such assets should be given the same treatment as inventory items and that all costs should be allocated thereto just as if saleable goods were being produced. They state that no special favor should be granted in the allocation of any cost, as long as sufficient facts are available to enable the allocation to be made. They argue that allocation of overhead to fixed assets is similar to allocation to joint products and byproducts, and should be made at regular rates. Of course, no item should be capitalized at an amount greater than that prevailing in the market. (c) It could be argued that because costs of development are usually higher on the first few units, the additional costs of $273,000 should be allocated to all four machines. If these costs are due to inefficiency and not development costs, the additional costs should be expensed....
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This note was uploaded on 06/06/2010 for the course ACCOUNTING ac505 taught by Professor Khan during the Spring '10 term at DeVry Fremont.
- Spring '10