Service Allocations: Direct & Step
Service Department Cost Allocation Foundation
departments provide services to other subunits
center. Cost centers whose costs are not allocated to another cost center are called
Service and production departments can be intermediate costs centers. Service departments cannot be final costs
Why allocate service department costs?
What are the three methods for allocating service department costs?
All costs allocated directly to the final user, or cost center. There are no intermediate cost centers.
When allocating costs from service centers, the total cost is the direct cost plus the allocated cost.