Service cost allocation

Service cost allocation - Service cost allocation...

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Service cost allocation Allocating Costs of One Service or Support Department to Multiple Users Single-Rate Method : puts fixed and variable costs into one cost pool and allocates them using one rate. Dual-Rate Method - use variable-cost pool and a fixed-cost pool, and allocates each cost pool using a different cost allocation base. Allocation bases for either the Single-rate method or the dual-rate method can be: 1) Budgeted rate and budgeted hours to be used by the operating divisions; or 2) Budgeted rate and actual hours used by operating divisions. Benefits and Costs of the Single-Rate Method Benefits: The cost to implement it is low because it avoids the analysis needed to classify all of the service department's cost into fixed and variable costs. Costs: The single-rate method makes fixed costs of the service department appear to be variable costs to the user departments, possibly leading to outsourcing that hurts the organization as a whole. Benefits and Costs of the Dual-Rate Method
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Service cost allocation - Service cost allocation...

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