What are the three methods of cost allocation?
C. There are three methods commonly used to allocate support costs: (1) the direct method; (2) the sequential (or step) method; and (3) the reciprocal method.
What are the two stages of cost allocation?
The first stage of allocation determines the cost of each occurrence of an overhead event during the process. The second stage allocates the cost of each occurrence to individual items produced by the business.
What is the two step allocation process?
A two-stage system first allocates costs to departments or activities and then allocates costs from the departments or activities to the products or services.
What is the double apportionment method?
Double Apportionment Method The double apportionment method first recognizes support provided by service departments to all other service departments as well as to the patient services departments. After this step, which is called the first allocation (apportionment), some costs still remain in the support departments.
What are the four steps in the cost allocation process?
There are four major steps to allocating expenses:
- Determine program services and supporting activities.
- Determine direct and indirect expenses.
- Determine proper allocation methods for indirect expenses.
- Apply allocation methods to indirect expenses.
What steps are required to implement the two stage activity-based costing model?
Step 1: Identify the products that are the chosen cost objects. Step 2: Identify the direct costs of the products Step 2: Identify the direct costs of the products. Step 3: Select the activities and cost-allocation bases to use for allocating indirect costs to the products for allocating indirect costs to the products.
What is the step method for cost allocation?
The step allocation method is an approach used to allocate the cost of the services provided by one service department to another service department.
Whats the step down method?
Unlike direct method, the step method (also known as step down method) allocates the cost of a service department to other service departments as well as to operating departments. The cost allocation under step method is a sequential process.
What is the step down approach?
The step-down approach proposes that patients should initially be treated with more powerful and costly alternatives, only being stepped-down to a less intensive intervention in strictly defined circumstances.