Instruction manuals

10 Cost Allocation Overheads(1)

Description
powerpoint
Published
of 13
All materials on our website are shared by users. If you have any questions about copyright issues, please report us to resolve them. We are always happy to assist you.
Related Documents
Share
Transcript
   ACCY 302 (Chen) 1 Objectives for today  Cost allocation  Definition  Examples of cost allocation  Reasons for cost allocation   Agency implications  Incentive issues to consider when allocating costs  Cost allocation 2  Cost allocation : the assignment of indirect (common/joint costs) to different departments, processes, or products  Cost object : the product, process, department, or program to which a set of costs are allocated  Indirect costs : costs that cannot be directly traced to units produced or cost objects precisely because such costs are incurred in providing benefits to several product lines or users  Allocation base : a measure of activity associated with the pool of common costs being distributed to the cost objects  ACCY 302 (Chen)  Cost allocation 3 Department of Accountancy University of Illinois at Urbana-Champaign  Cost allocation requires the following steps:  Step 1: Define the cost objects  Step 2: Accumulate the common costs to be assigned to the cost objects  Step 3: Choose an allocation base  ACCY 302 (Chen)  Example of cost allocation 4 Department of Accountancy University of Illinois at Urbana-Champaign  Allocation of costs for e-mail service  Step 1  Cost object = departments (Manufacturing, Sales, R&D and Administration)  Step 2  Total indirect costs = 575,000 (computer lease 273,000 + labor 195,000 + software 78,000 + other costs 29,000)  ACCY 302 (Chen)

Hamid

Jul 23, 2017
We Need Your Support
Thank you for visiting our website and your interest in our free products and services. We are nonprofit website to share and download documents. To the running of this website, we need your help to support us.

Thanks to everyone for your continued support.

No, Thanks