What are the three methods of departmental cost allocation? Explain how they differ, which is themost preferred and why

Q: Regardless of the system used In departmental cost analysis: Multiple Cholce Total departmental…

A: Direct cost like materials and labor are not allocated but indirect cost like overhead cost is…

Q: How is a departmental contribution to overhead an effective tool in assessing each department's…

A: Departmental contribution to overhead is the amount of money a deptt. has available after its…

Q: What is conceptually the most defensible method for allocating support-department costs? Why?

A: Cost Allocation Method: The cost allocation method is the method by which the costs to be assigned…

Q: Understand costclassifications used in makingdecisions: differential costs,opportunity costs, and…

A: Cost: The amount paid to purchase the asset, install it, and put it into operations, is referred to…

Q: There are two types of costs originating from the modern agency problem: direct costs and indirect…

A: Costs The expenditure incurred on that is imputable to ascertain the value of a given item is…

Q: Which of the following is the most difficult but most accurate of the commonly used methods for…

A: The cost of support departments is allocated to the production departments. Some a support…

Q: Is it true that with the use of the algebraic method, each department’s costs are set out in an…

A: Direct costs are costs that can be credited to a specific department. The company knows what…

Q: Differentiate between the mechanisms of an “actual costing” budgetary system against a “normal…

A: Budgetary system is the system which is applied by the company in order to be on track and within…

Q: Which of the following describes the term ‘cost unit’?   A basis for cost classification A…

A: Cost unit is the per-unit cost incurred to produce the product. It includes both costs i.e fixed…

Q: Need detail explanation. Explain departmental income statement and the criterion for division of…

A: A department is a unit or division of the company. A company may structure its business in different…

Q: . What are the three principle objectives of cost accounting system?

A: Cost accounting system is a system in which all the costs related to manufacturing, selliing the…

Q: The residual income approach to measuring divisional performance measurement is closely related to…

A: Residual income approach refers to the net income measurement that the investment earns above the…

Q: “Department indirect-cost rates are never activity-cost rates.” Do you agree? Explain.

A: Department Indirect Cost Rate:  Department indirect cost rate is the rate to find out the proportion…

Q: Which of the following describe the reciprocal method for cost allocation: Select one: O a.…

A: Cost allocation is very important in case there are two types of departments are there. One is…

Q: What are support departments, and why are their costs allocated to other departments?  What process…

A: generally supporting departments are the departments that provide services to main departments. so…

Q: What are the limitations of joint product and departmental cost allocation?

A: The limitations of joint product and departmental cost allocation.

Q: The order in which the costs of service departments are allocated will affect the amounts allocated…

A: There are two type of departments in the business. One is operating departments and other is Service…

Q: Why aren’t common costs allocated to segments under the contribution approach?

A: Segment margin is a useful measure to assess the performance of an operating unit.   A common fixed…

Q: Why does dual cost allocation improve the resulting allocation of service department costs?

A: Dual Cost Allocation segregates total costs into two parts Fixed Costs. Variable Costs. Each…

Q: What is the typical focus of responsibility reports for cost centers, revenue centers, and profit…

A: Responsibility Centre:   A responsibility centre is used to show the financial performance of all…

Q: Distinguish between departmental gross profit, departmental operating income and departmental direct…

A: Departmental Accounting: This accounting is used for maintaining the accounts of various branches or…

Q: Explain the difference between the engineered-cost and discretionary-cost approaches to…

A: Cost: The amount paid to purchase the asset, install it, and put it into operations, is referred to…

Q: Compare the total support department costs allocated to each production department under each cost…

A: Calculation of the total support department costs to the Cutting department under the direct method…

Q: Cost classifications used for preparing financial statements Include: Multiple Choice Product cost…

A: Answer : Concept :  Product cost is the cost that can be directly associated with the product and…

Q: be applied when the step method of allocating service department costs is used?     The sequence…

A: step method allocation of department costs, allocate some of the service department costs to other…

Q: Which of the following methods recognizes some (but not all) of the services that occur between…

A: Services- It is an intangible thing which can not be seen by any person but anyone can feel it like…

Q: Which of the following is referred to as the second stage of cost allocation? O The allocation of…

A: Cost allocation is the assigning and allocating the cost to the specific objects, departments,…

Q: ion for division of indirect costs among departments. Provide a hypothetical example in which at…

A: Departmental income statements are prepared to assess the relative profitability of each department.…

Q: Describe the difference between direct and step-down methods to allocate service department costs to…

A: Service departments are those department which provides services to other departments like other…

Q: Explain briefly the main differences between the direct, step-down, and reciprocal-services methods…

A: Cost Allocation Method: The cost allocation method is the method by which the costs to be assigned…

Q: What are the four components of target costing? Why areeach of these components important for target…

A:

Q: Which method of allocating support department costs is most accurate of the three methods.

A:

Q: the following methods of cost allocation is completed by taking the service flows to epartments only…

A: Direct method

Q: Discuss the role of cost accounting in relation to various department in organisation.

A: Introduction: Cost accounting is a form of managerial accounting that aims to capture a company's…

Q: Explain why some production costs must be assigned to products through an allocation process.

A: Production costs: These are the costs incurred on product manufacturing or delivering services by…

Q: Explain departmental income statement and the criterion for division of indirect costs among…

A: Departmental income statements are prepared to assess the relative profitability of each department.…

Q: The three major categories of agency costs are

A: Agency cost is considered as an internal cost, that arises from the actions of an agent who works on…

Q: How to allocate indirect costs to multiple departments using an ABC cost driver?

A: Overhead means the cost incurred indirect in factory for the production of goods. Manufacturing…

Q: How Absorption and Variable Costing, Budgeting and Responsibility Accounting are connected?

A: Answer: Absorption and Variable Costing, Budgeting and Responsibility Accounting  There is…

Q: Which of the following is one of the difference between management accounting and cost accounting.

A: Difference between management accounting and cost accounting is given below,

Overheads

In cost accounting, overhead refers to those expenses which occur during the operating of a business. Overhead includes the fixed, variable, or semi-variable which is not directly involved with a company product or service. It is very important to analyze overhead expense as it helps the company in determining how much a company must charge for its products and services so that they can generate profit.  Overhead expenses depend upon the nature of the business operations.