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WEEK 4 LECTURE - Coggle Diagram
WEEK 4 LECTURE
DEPARTMENTAL APPROACH
Overhead to Production depts to products
More accurate product costs
Takes into account differences in costs incurred in different depts
MULTIPLE SUPPORT DEPARTMENTS
3 APPROACHES
DIRECT
Simplest, ignores reciprocal flows
Uses services flows
ONLY TO PRODUCTION DEPARMENTS
STEP DOWN
RECIPROCAL
BUDGETED & ACTUAL
ACTUAL
DIRECT & INDIRECT = ACTUAL
NORMAL
DIRECT = ACTUAL
BUDGETED INDIRECT RATE * ACTUAL ALLOCATION BASE = INDIRECT
DUAL ALLOCATION
SEPARATES FC & VC
Traces
VC
to depts based on
USAGE
FC allocated based on
EQUAL SHARE among depts
or
PREDETERMINED BUDGETED
proportion