Harbor City Community Center

990 Words Mar 9th, 2015 4 Pages
Threaded Discussion:
1) In and FPO context, full-cost accounting can be used to define cost objects. However, since NPOs are not outputting products, full-cost accounting is used to serve a different purpose of cost allocation. Full-cost accounting allows an NPO to be broken down into cost centers, which Young suggests be thought of as “buckets” during the Stage 1 analysis. The two categories of centers are mission centers and cost centers. The mission centers deal with the NPO’s main purpose, generally charging for a service, which is why it can be called a “revenue center”. The other type of center is a service center, which serves the purpose of accumulating the costs of activities to support the mission center. Three methods of
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These criteria are not necessarily the same for an FPO because FPOs are generally easier to distinguish between a direct and indirect cost, which changes the criteria.

4) I touched upon this briefly in my previous discussion of question three that one main difference between the methods is the accuracy and complexity; the direct method is least accurate and simplest, stepdown method more accurate and more complex, and the reciprocal method is the most accurate and the most complex. The direct method excludes the cost effects associated with one service center’s use of another service center. The stepdown method includes the cost effects associated with one service center’s use of another service center and allocates service centers to other service centers/mission centers. A downside to the stepdown method is that a service center cannot receive an allocation once its costs have been allocated. The reciprocal method allows all service centers to both make and receive allocations to and from each other and mission centers. It is apparent through each method’s functions why one is more accurate and complex than the last.

5) A process system is used to find an average cost per unit by dividing the cost by the total number of units produced, those units of output being nearly identical. A job-order
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