Methods of allocating service costs, Cost Accounting

Methods of Allocating Service Costs

Direct Method

The service costs are merely allocated to the production department according to the usage of the services given.

Step-wise Method

Several of the costs of the reciprocal services will be recognized though only to several extent. The steps followed involved:

1. Select one of the service departments and allocate its costs to all the other departments including the other service departments. Generally the basis of choosing which service department to start along with is the service department such provides services to the greatest number of another department.

2. Another service department is selected and its net costs allocated the remaining departments excluding the first service departments.

3. Repeat the process till the entire service department costs have been allocated to the production departments.

Reciprocal Method

This method totally considers all reciprocal services. It is the main precise in technically finished method. These methods employ the following techniques as:

i. Simultaneous Equation

ii. Matrix Algebra

Posted Date: 2/5/2013 7:53:12 AM | Location : United States







Related Discussions:- Methods of allocating service costs, Assignment Help, Ask Question on Methods of allocating service costs, Get Answer, Expert's Help, Methods of allocating service costs Discussions

Write discussion on Methods of allocating service costs
Your posts are moderated
Related Questions
Direct Material Cost Variances (DMCV) This variance is a general difference in the standard direct material cost and the actual direct material cost. This variance may be prese

Frame-it Ltd is a manufacturer of metal picture frames. The firm's two product lines are designate S (small frames: 12 x18 cm) and L (large frames: 20 x 25 cm). The primary raw mat

If a company trades in a building towards a new building and does not recognize a gain or loss (because of code section 1031), will this transaction affect the cash flows statement

describe the procedures involved in payroll labour cost accounting

A. Bolero Industries Ltd. has been approached by a customer who would like a special job to be done for her, and is willing to pay $60,000 for it. The job would require the followi

NSC Ltd. has a 31 May fiscal year-end. NSC disposed of its Information Systems Group (ISG) on 31 January 20X3. ISG had a net loss (after taxes) of $37,700,000 in 20X3, to the date

You have been asked by Mogul-Basher (MB) Ltd., a manufacturer of snowboards, to evaluate its capital structure. As a first step, you need to estimate MB's current weighted average

Specific Order Costing This is a broad costing system that is applicable where work jobs consist of separate jobs, batches or contracts.  Every job or contract or batch is a c

Elements of Manufacturing costs Manufacturing costs are the costs incurred to create a product. Keep in mind for a product that refers to both services and goods. The ele

Denair Fine Wines, Inc., is planning to bring out a higher-quality wine product than any currently available in Stanislaus county. They've decided on selling the blended, fortified