Unformatted text preview: ice center. The basis attempts to reflect and measure the usage of that cost center by the other cost centers—both service centers and
production centers. For example, in organizations that have a laundry (such as a hospital or a hotel) “pounds
of laundry” frequently is used as the basis for allocating the costs of a laundry service center. Each cost center thus receives a portion of the institution's laundry costs in accordance with its proportion of the total
pounds of laundry processed. If a particular cost center used no pounds of laundry, it would not receive any
allocation from the laundry cost center.
3. The amount of a given service center's costs allocated to a particular production center will depend, in part, on
whether that service center is allocated early or late in the sequence. If it is allocated late in the sequence, it
will be “loaded” with some costs from service cost centers allocated earlier in the sequence. If it is allocated
early, it will not.
4. Total costs do no...
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- Spring '14
- ........., Boston University School of Management, Crimson Press Curriculum Center, Professor of Accounting and Control