Shamsa Archive

Shadow Prices

Shadow Prices: Definition and Explanation of Shadow Price: The determination of the optimum mix to maximize the contribution margin or to minimize cost assumes a defined set of constraints. It is useful to consider the sensitivity of the solution if a constraint is relaxed. 

Service Department Costing

Service Department Costing: After studying this chapter you should be able to: Difference between service department and operating department: Most of the large organizations have both operating departments and service departments. The central purpose of the organization are carried out in the operating department.

Selecting Allocation Base

Selecting Allocation Base: Costs are ordinarily assigned to products and services by using a two stage process. In first stage, service department and other costs are allocated to operating departments. In second stage, the costs that have been assigned to operating departments are allocated
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