Cost Allocations Using Direct and Step Methods

Cost allocation is method of allocating of a common cost to several cost objects. For example, a business might assign or allot the cost of an expensive computer system to the three main areas of the company that use the system. A corporation with only one electric meter might allocate the electricity bill to several departments in the company.

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.