ALLOCATION OF SUPPORT- DEPARTMENT COSTS

Slides:

Advertisements

Similar presentations

© 2012 Pearson Prentice Hall. All rights reserved. Allocation of Support Department Costs, Common Costs, and Revenues.

Advertisements

Copyright © 2012 McGraw-Hill Ryerson Limited 4-1 PowerPoint Author: Robert G. Ducharme, MAcc, CA University of Waterloo, School of Accounting and Finance.

1 PowerPointPresentation by PowerPoint Presentation by Gail B. Wright Professor Emeritus of Accounting Bryant University © Copyright 2007 Thomson South-Western,

7-1 Copyright © 2004 by Nelson, a division of Thomson Canada Limited. Support Department Cost Allocation 7 PowerPresentation® prepared by David J. McConomy,

Agenda Service department cost allocations The downward demand spiral.

Systems Design: Process Costing. Similarities Between Job-Order and Process Costing  Both systems assign material, labor and overhead costs to products.

Cost Allocation: Service Department Costs and Joint Product Costs

Copyright © 2010 by The McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill/Irwin Chapter Seven.

Cost Allocations EMBA 5412 Fall What are Cost Allocations  Assignment of Indirect Common Joint costs  To cost objects Processes Products Programs.

Copyright © 2015 Pearson Education, Inc. All Rights Reserved. Allocation of Support Department Costs, Common Costs, and Revenues.

Allocation of Support Department Costs, Common Costs, and Revenues

©2003 Prentice Hall Business Publishing, Cost Accounting 11/e, Horngren/Datar/Foster Allocation of Support Department Costs, Common Costs, and Revenues.

Allocation of Support Activity Costs and Joint Costs

Allocation of Support Department Costs, Common Costs, and Revenues

© 2012 McGraw-Hill Education (Asia) Cost Allocation Chapter 6.

Service Department Costing: An Activity Approach

Cost and Revenue Allocations

© 2010 The McGraw-Hill Companies, Inc. Systems Design: Process Costing Chapter 4.

© The McGraw-Hill Companies, Inc., 2005 McGraw-Hill/Irwin 17-1 JOB ORDER COST SYSTEMS AND OVERHEAD ALLOCATIONS Chapter 17.

Full Costs and Their Uses

© The McGraw-Hill Companies, Inc., 2008 McGraw-Hill/Irwin Financial & Managerial Accounting The Basis for Business Decisions FOURTEENTH EDITION Williams.

Allocation of Support Department Costs, Common Costs, and Revenues

9 Responsibility Accounting Douglas Cloud Pepperdine University

1 PowerPointPresentation by PowerPoint Presentation by Gail B. Wright Professor Emeritus of Accounting Bryant University © Copyright 2007 Thomson South-Western,

Copyright © 2008 by The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Irwin Allocation of Support Activity Costs and Joint Costs 18 Chapter.

COST MANAGEMENT Accounting & Control Hansen▪Mowen▪Guan COPYRIGHT © 2009 South-Western Publishing, a division of Cengage Learning. Cengage Learning and.

Managing and Allocating Support-Service Costs Chapter 10.

Copyright © 2008, The McGraw-Hill Companies, Inc.McGraw-Hill/Irwin Chapter Four Systems Design: Process Costing.

PowerPoint Authors: Susan Coomer Galbreath, Ph.D., CPA Charles W. Caldwell, D.B.A., CMA Jon A. Booker, Ph.D., CPA, CIA Cynthia J. Rooney, Ph.D., CPA Copyright.

Cost Management ACCOUNTING AND CONTROL

©2003 Prentice Hall Business Publishing, Cost Accounting 11/e, Horngren/Datar/Foster Allocation of Support Department Costs, Common Costs, and Revenues.

6-1 Support Department Cost Allocation Prepared by Douglas Cloud Pepperdine University Prepared by Douglas Cloud Pepperdine University.

CHAPTER 15 Allocation of Support Department Costs, Common Costs, and Revenues.

7 -1 Support Department Cost Allocation CHAPTER Describe the difference between support departments and producing departments. 2.Calculate single.

Copyright  2006 McGraw-Hill Australia Pty Ltd PPTs t/a Management Accounting: Information for managing and creating value 4e Slides prepared by Kim Langfield-Smith.

Copyright © 2006, The McGraw-Hill Companies, Inc.McGraw-Hill/Irwin 11 th Edition Chapter 15.

The Need for Cost Allocations First Stage Allocations Service department costs are allocated to operating departments. Service Department (Cafeteria) Service.

Copyright © 2003 Pearson Education Canada Inc. Slide Chapter 14 Cost Allocation.

© 2014 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license.

15-1 To accompany Cost Accounting 12e, by Horngren/Datar/Foster. Copyright © 2006 by Pearson Education. All rights reserved. Allocation of Support Department.

Prepared by Diane Tanner University of North Florida Chapter 15 1 Support Cost Allocation.

1-1 CHAPTER 6 Allocating Costs of a Supporting Department to Operating Departments Dr. Hisham Madi.

The Need for Cost Allocations First Stage Allocations Service department costs are allocated to operating departments. Service Department (Cafeteria) Service.

© 2012 Pearson Prentice Hall. All rights reserved. Allocation of Support Department Costs, Common Costs, and Revenues Edited for ACCT 7310 by Dr. Bailey.

Copyright © 2013 Nelson Education Ltd. PowerPoint Presentations for Cornerstones of Cost Accounting First Canadian Edition Adapted by George Gekas Ryerson.

IES 342 Industrial Cost Analysis & Control | Dr. Karndee Prichanont, SIIT 1 Cost Allocation: Service Departments & Joint Product Costs Chapter 12 Objectives:

Copyright © 2010 by The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Irwin Job Order Cost Systems and Overhead Allocations Chapter 17.

PowerPoint Authors: Susan Coomer Galbreath, Ph.D., CPA Charles W. Caldwell, D.B.A., CMA Jon A. Booker, Ph.D., CPA, CIA Cynthia J. Rooney, Ph.D., CPA Copyright.

Prepared by Diane Tanner University of North Florida Support Cost Allocation ACG 4361.

Overheads and absorption costing

Support Department Cost Allocation

Allocation of Support Department Costs, Common Costs, and Revenues

Service Department Cost Allocations

A closer look at overhead costs

Cost Allocation Decisions

Predetermined Overhead Rates and Overhead Analysis in a Standard Costing System Appendix 11A Appendix 11A: Predetermined Overhead Rates and Overhead Analysis.

Chapter 19 Manufacturing Overhead Standard Costs: Completing the Accounting Cycle for Standards costs.

Cost Accounting and Reporting Systems

MANAGEMENT ACCOUNTING

Cost Allocation: Service Departments and Joint Product Costs

Cornerstones of Managerial Accounting 2e Chapter Fourteen

Prepared by Debby Bloom-Hill CMA, CFM

Support Activity and Dual Rate Allocations

Allocation of Support Department Costs, Common Costs, and Revenues

Cost Allocations of Service Departments

Activity Based Costing - ABC

THE INSTITUTE OF CHARTERED ACCOUNTANTS OF SRI LANKA

Allocation of Support Department Costs, Common Costs, and Revenues

Presentation transcript:

ALLOCATION OF SUPPORT- DEPARTMENT COSTS CHAPTER 15 ALLOCATION OF SUPPORT- DEPARTMENT COSTS

Allocating Costs of a Supporting Department to Operating Departments Supporting (Service) Department – provides the services that assist other internal departments in the company Operating (Production) Department – directly adds value to a product or service Service Department (Canteen) (Maintenance) Operating Department (Machining) (Assembly)

Methods to allocate support department costs Single-rate method Dual-rate method Allocates costs in each cost pool (service department) to cost objects (production departments) using the same rate per unit of a single allocation base No distinction is made between fixed and variable costs in this method Segregates costs within each cost pool into two segments: a variable-cost pool and a fixed-cost pool. Each pool uses a different cost-allocation base

Allocation Bases Under either method, allocation of support costs can be based on one of the three following scenarios: Budgeted overhead rate and budgeted hours Budgeted overhead rate and actual hours Actual overhead rate and actual hours Choosing between actual and budgeted rates: budgeted is known at the beginning of the period, while actual will not be known with certainty until the end of the period

Methods of Allocating Support Costs to Production Departments Service Department (Canteen) (Maintenance) Operating Department (Machining) (Assembly) Direct Step-Down Reciprocal

Direct Method Allocates support costs only to Operating Departments No Interaction between Support Departments prior to allocation

Direct Method Service Department (Canteen) (Maintenance) Operating Department (Machining) (Assembly) Interactions between service departments are ignored and all costs are allocated directly to operating departments.

Direct Method Example

Direct Method Example

Step-Down Method Allocates support costs to other support departments and to operating departments that partially recognizes the mutual services provided among all support departments One-Way Interaction between Support Departments prior to allocation

Step Method Service Department (Canteen) Operating Department (Machining) Once a service department’s costs are allocated, other service department costs are not allocated back to it. Service Department (Maintenance) Operating Department (Assembly)

Step Method Service Department (Canteen) Operating Department (Machining) Maintenance will have a new total to allocate to operating departments; its own costs plus those costs allocated from the Canteen. Service Department (Maintenance) Operating Department (Assembly)

Step Method Example

Reciprocal Method Allocates support department costs to operating departments by fully recognizing the mutual services provided among all support departments Full Two-Way Interaction between Support Departments prior to allocation

Reciprocal Method Service Department (Canteen) Operating Department (Machining) Interdepartmental services are given full recognition rather than partial recognition as with the step method. Service Department (Maintenance) Operating Department (Assembly) Because of its mathematical complexity, the reciprocal method is rarely used.

Reciprocal Method Example

Choosing Between Methods Reciprocal is the most precise Direct and Step-Down are simple to compute and understand Direct Method is widely used

End of Chapter 15 End of Chapter 15.