Professional Documents
Culture Documents
CHAPTER
Support
Department
Cost
Allocation
7 -2
Objectives
1. Describe theAfter
difference between
studying this support
departmentschapter,
and producing departments.
you should
2. Calculate single be
andable
multiple
to: changing rates
for a support department.
3. Allocate support-department costs to
producing departments using the direct,
sequential, and reciprocal methods.
4. Calculate departmental overhead rates.
7 -3
Types of Departments
Producing
departments are
directly responsible for
creating the products or
services sold to
customers.
7 -4
Types of Departments
Supporting
departments provide
essential support
services for producing
departments.
Maintenance, grounds,
engineering, personnel, storage
7 -5
Objectives of Allocation
AND
Budgeted costs.
7 -17
Budgeted Versus Actual Usage
A general principle of performance evaluation is
that managers should not be held responsible for
costs or activities over which they have no control.
7 -18
Grinding Assembly
7 -23
Grinding Assembly
7 -24
Direct Method
7 -25
Direct Method
7 -26
1 2
Power Maintenance
7 -27
Grinding Assembly
7 -29
200,000 0.20
Power =
(200,000 + 600,000 +
200,000)
600,000 0.60
(200,000 + 600,000 +
200,000)
Sequential Method
7 -30
4,500
0.50
(4,500 + 4,500)
Sequential Method
7 -31
Chapter Seven
The End
7 -43