Cost Accounting, Student Value Edition Plus MyAccountingLab with Pearson eText -- Access Card Package (15th Edition)
Cost Accounting, Student Value Edition Plus MyAccountingLab with Pearson eText -- Access Card Package (15th Edition)
15th Edition
ISBN: 9780133781106
Author: Charles T. Horngren, Srikant M. Datar, Madhav V. Rajan
Publisher: PEARSON
Question
Chapter 15, Problem 15.1Q
To determine

Cost Allocation Method:

The cost allocation method is the method by which the costs to be assigned are identified and aggregated. The cost allocation method is of two types, single rate allocation method, and dual rate allocation method.

To explain: The difference between the single-rate and the dual-rate methods.

Expert Solution & Answer
Check Mark

Answer to Problem 15.1Q

The difference between the single-rate cost allocation and the dual-rate cost allocation methods is as follows:

  • The allotment of costs by the single-rate method involves no variation between the fixed and variable costs while the allotment of costs by dual-rate method includes making two different pools one for the variable cost and the other for the fixed cost.
  • The costs in the single-rate method of allotment are alloted using the same rate per unit of the single base while in the dual-rate method of allotment, the cost in each pool is alloted using the different base of allocation.

Explanation of Solution

  • The cost allocation refers to the method of identifying the costs which are needed to be assigned to a unit.
  • The costs are assigned as per the needs of the departments or the products or the inventories.
  • The cost allocation methods are of two types-single-rate allocation method and dual-rate allocation method.
Conclusion

Thus, the difference between the single-rate and the dual-rate allocation methods are as mentioned above.

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