Chapter 13 discusses concepts and methods of assigning indirect costs such as overhead, to departments. Additionally, service department cost allocation and joint-process cost allocation are explained. | PowerPoint Presentation by LuAnn Bean Professor of Accounting Florida Institute of Technology Allocating Costs To Responsibility Centers CHAPTER 13 © 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. Managerial Accounting 11E Maher/Stickney/Weil Chapter 13: Allocating Costs to Responsibility Centers CHAPTER GOAL Chapter 13 discusses concepts and methods of assigning indirect costs such as overhead, to departments. Additionally, service department cost allocation and joint-process cost allocation are explained. ☼ ☼ Chapter 13 discusses concepts and methods of assigning indirect costs, such as overhead, to departments. We call such cost assignment cost allocation. Additionally, service department cost allocation and joint-process cost allocation are explained. DIRECT COST: . | PowerPoint Presentation by LuAnn Bean Professor of Accounting Florida Institute of Technology Allocating Costs To Responsibility Centers CHAPTER 13 © 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. Managerial Accounting 11E Maher/Stickney/Weil Chapter 13: Allocating Costs to Responsibility Centers CHAPTER GOAL Chapter 13 discusses concepts and methods of assigning indirect costs such as overhead, to departments. Additionally, service department cost allocation and joint-process cost allocation are explained. ☼ ☼ Chapter 13 discusses concepts and methods of assigning indirect costs, such as overhead, to departments. We call such cost assignment cost allocation. Additionally, service department cost allocation and joint-process cost allocation are explained. DIRECT COST: Definition Is one that firms can identify specifically with, or trace directly to a particular product, department, or process. LO 1 A direct cost is one that firms can identify specifically with a particular product, department, or process. INDIRECT COST: Definition Results from joint use of a facility or service by several products, departments, or processes. LO 1 An indirect cost, in contrast, results from the joint use of a facility or a service by several products, departments, or processes. What are common costs? Common costs are indirect costs that cannot be identified by a cost object. LO 1 MANAGERS WANT TO KNOW! Common costs are indirect costs that no specific cost object causes. For example, the cost of the engine pulling a train is common to all the cars it pulls. Firms allocate these common costs to develop division, department, or product cost information. Why allocate indirect costs to products? Full product costs should be known, including allocated indirect costs, for pricing .
