Horngren's Cost Accounting, Student Value Edition (16th Edition)
16th Edition
ISBN: 9780134476032
Author: Srikant M. Datar, Madhav V. Rajan
Publisher: PEARSON
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Question
Chapter 15, Problem 15.7Q
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 three methods of allocating the costs of support departments to the operating departments.
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Which method of allocating support department costs is most accurate of the three methods.
Compare and explain differences in the support-department costs allocated to eachproduction department.
What are support departments, and why are their costs allocated to other
departments? What process is used to allocate support department costs?
Chapter 15 Solutions
Horngren's Cost Accounting, Student Value Edition (16th Edition)
Ch. 15 - Prob. 15.1QCh. 15 - Describe how the dual-rate method is useful to...Ch. 15 - How do budgeted cost rates motivate the...Ch. 15 - Give examples of allocation bases used to allocate...Ch. 15 - Why might a manager prefer that budgeted rather...Ch. 15 - To ensure unbiased cost allocations, fixed costs...Ch. 15 - Prob. 15.7QCh. 15 - What is conceptually the most defensible method...Ch. 15 - Distinguish between two methods of allocating...Ch. 15 - What are the challenges of using the incremental...
Ch. 15 - Prob. 15.11QCh. 15 - What is one key way to reduce cost-allocation...Ch. 15 - Describe how companies are increasingly facing...Ch. 15 - Distinguish between the stand-alone and the...Ch. 15 - Identify and discuss arguments that individual...Ch. 15 - Single-rate versus dual-rate methods, support...Ch. 15 - Single-rate method, budgeted versus actual costs...Ch. 15 - Dual-rate method, budgeted versus actual costs and...Ch. 15 - Support-department cost allocation; direct and...Ch. 15 - Support-department cost allocation, reciprocal...Ch. 15 - Direct and step-down allocation. E-books, an...Ch. 15 - Reciprocal cost allocation (continuation of...Ch. 15 - Allocation of common costs. Evan and Brett are...Ch. 15 - Allocation of common costs. Gordon Grimes, a...Ch. 15 - Revenue allocation, bundled products. Couture Corp...Ch. 15 - Allocation of common costs. Jim Dandy Auto Sales...Ch. 15 - Single-rate, dual-rate, and practical capacity...Ch. 15 - Prob. 15.28PCh. 15 - Fixed-cost allocation. Central University...Ch. 15 - Allocating costs of support departments; step-down...Ch. 15 - Support-department cost allocations;...Ch. 15 - Common costs. Tate Inc. and Booth Inc. are two...Ch. 15 - Prob. 15.33PCh. 15 - Support-department cost allocations;...Ch. 15 - Revenue allocation, bundled products. Boca Resorts...Ch. 15 - Support-department cost allocations; direct,...
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Similar questions
- Explain why support costs are allocated to departments.arrow_forwardGive examples of allocation bases used to allocate support-department cost pools to operating departments.arrow_forwardHow does management determine the order in which support department costs are allocated under the sequential method?arrow_forward
- When using the sequential distribution method of distributing service department costs, if a service department receives services from other service departments, will those costs be allocated back to it even though it was the first service department distributed?arrow_forwardWhich of the following principles should be applied when the step method of allocating service department costs is used? The sequence of allocation among departments should be randomly selected. The sequence of allocation among departments should proceed from the largest department as measured by total assets to the smallest. The sequence of allocation among departments should proceed from the largest provider of interdepartmental services to the smallest. All possible sequences of service department allocations should be computed. The sequence that provides the largest allocation of service costs should then be selected.arrow_forwardExplain briefly the main differences between the direct, step-down, and reciprocal-services methods of service department cost allocation.arrow_forward
- Assigning indirect costs to departments is completed by ________.arrow_forwardDistinguish between direct and indirect expenses and identify bases for allocating indirect expenses to departments.arrow_forwardWhat is conceptually the most defensible method for allocating support-department costs? Why?arrow_forward
- What are the differences between single and dual rate allocation? Explain with suitable examples. b) Provide a numerical example for single rate allocation and dual rate allocation and explain the process of allocating support department costs to the operating department, assuming that: The company has two support departments “S1 & S2” and two operating departments “O1 & O2.” The company use the direct method to allocate support department costs. Note: You are required to provide numerical examples assuming the values of your own and they should not be copied from any sources.arrow_forwardWhich of the following methods recognizes some (but not all) of the services that occur between service departments? Indirect method. Step-down method. Reciprocal-services method. Dual-cost allocation method. Direct method.arrow_forwardDistinguish among the three methods of allocating the costs of support departments to operating departments. The ignores any services rendered by one support department to another; it allocates each support department's costs directly to the operating departments. The a sequential manner that partially recognizes the mutual services provided among all support departments. allocates support-department costs to other support departments and to operating departments in The allocates support-department costs to operating departments by fully recognizing the mutual services provided among all support departments.arrow_forward
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