Unformatted text preview: then the cost on which the price is based comes closer to the true
consumption of resources needed for each job. As a result, the multi-cost-center approach helps to eliminate the
cross subsidization that takes place in the one-cost-center approach.
David W. Young • Management Accounting for Managers • Chapter 1
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SUMMARY OF COST ACCOUNTING CHOICES
As the discussion in this chapter has indicated, the managerial choices involved in developing a cost accounting
system frequently are quite difficult. Moreover, they are highly interdependent. The choice of cost centers will influence the distinction between direct and indirect costs. The choice of a particular final cost object frequently will
require the use of certain intermediate cost objects, or call for certain kinds of cost centers. Allocation of service
center costs will be d...
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This document was uploaded on 03/30/2014.
- Spring '14