Understanding of cost reallocation

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Reference no: EM1350536

Cost Reallocation

The following link describes an organization's approach to inservice cost allocation: EXISTING CVP PLANT-IN-SERVICE COST ALLOCATION . (https://www.usbr.gov/mp/cvpwaterrates/cost_allocation_study/chapter3.pdf)

Required:
You are required to read the above article and to discuss the various issues of cost allocation:

1. Describe the process of allocation of costs in this organization. Do you agree with the approach? Why or why not?.

2. Identify those situations when common costs are allocated.

3. Explain the impact of allocating common costs for internal decision making. Explain the impact of not allocating common costs for internal decision making.

Reference no: EM1350536

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