Unformatted text preview: nto production centers. This way of viewing costs has
some limitations. Specifically, whether a cost is direct or indirect says little
about its actual behavior as the volume of activity in a production center
increases or decreases. For this reason, full cost information is not especially useful for making certain kinds of decisions, called “alternative
choice decisions.” The costs appropriate for these decisions are discussed
in the next two chapters.
2. This chapter has only covered the “first stage” of the cost accounting effort. In this stage, we define cost centers and allocate service center costs
into production or revenue centers. In the “second stage,” we attached
production center costs to the cost objects passing through those centers,
so that we know the full cost of each. We did this in a minor way with
Lawn Care, Inc. However, when we move into a manufacturing setting
this activity becomes considerably more tricky; it is discussed in Chapters
4 and 5. ____________________________________________________________________________________________________________
David W. Young • Management Accounting for Managers • Chapt...
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- Spring '14