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Determining the allocation rate as the above example

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Unformatted text preview: ••••••••••••••••••••••••• There are several possible ways to distribute the salary to the two centers. We might ask the supervisor to maintain careful time records, which then could be used to distribute the salary. If we did this, we effectively would have converted the indirect cost into a direct cost, since we would have created a situation in which the cost (time) is physically traceable to each cost center. Alternatively, we might establish a distribution formula, using, say, salary dollars or number of personnel in each cost center as the distribution mechanism. •••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••...
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