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David W. Young • Management Accounting for Managers • Chapter 1
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This terminology can be confusing, since allocation is sometimes called apportionment and vice versa. Moreover, the terms distribution, allocation, and apportionment occasionally are used interchangeably. In addition to
these terminology differences, service center costs that are allocated to revenue centers are often called indirect
costs. The context usually clarifies the meaning, but, because of these terminology differences, it is important to
understand the processes being used rather than attempt to memorize the meanings of the terms.
In summary, before we can allocate service center costs, we must (1) determine the direct costs of each cost
center, (2) distribute indirect costs to the appropriate cost centers, and (3) choose a basis of allocation for each
service center. We then are ready to allocate servic...
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- Spring '14