Review Sheet - Cost & Management Accounting 2 - Term Test #2, April 27, 2006Learning OutcomeReferenceUnit 4: Appendix A - Service Dept. Costing and Other AllocationsTheory: Difference between operating and service departments; pros and cons of the three methods: direct, step, and reciprocal; which is most precise, least precise, and why? etc., Basis for allocating costs according to cost behavior (variable vs. fixed); if done at beginning of the year; if done at the end of the year. ; reason why it is inappropriate to allocate fixed service dept costsusing actualusageA-3, A-4, A-5, A-6, A-10, Allocation of Common costs—two methods: stand alone method; incremental method; definition of a common cost.Problem 1 on handout; 14-22; 14-23 on handoutUnit 5 : Supplemental Handout - Allocation of Joint Products and By ProductsDefinitions: Joint cost, joint product, main product, by product, scrap, separable cost; separable product, split-off point.;Why Sales value at split-off is a popular method; potential problem with physical measures method;
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Generally Accepted Accounting Principles, residual income, main product, constant gp, Profit NRV method