The building maintenance department for Taylor Bath Manufacturing Company budgets annual costs of $3‚000‚000 based on the expected operating level for the coming year. The costs are allocated to two production departments. Taylor Bath is considering two allocation bases for assignment of costs to departments: (1) square footage and (2) direct labor hours. The following data relate to the potential allocation bases: Production Dept. 1 Production Dept. 2 Square Footage
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allocate service department costs to “production” or user departments‚ and ultimately to the products and services that they provide. For example‚ hospitals use sophisticated methods for allocating costs of service departments such as Housekeeping‚ Patient Admissions‚ and Medical Records to patient wards and outpatient services‚ and then to individual patients. Historically‚ these allocations were important to hospitals because Medicare reimbursement was based on actual costs. To the extent that the
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allocate costs? How do companies allocate costs? And how this cost allocation can affect the decision making of the company. It is important for the companies to find the proper method to allocate the costs. Cost allocation is an important issue in many companies because many of the costs associated with designing‚ producing and distributing products and services are not easily identified with the products and services that are created. It would have been easier for companies to allocate cost if costs
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the unfair headquarters’ overhead cost allocation method of Korea insurance company. There are concerns towards the system by a manager. And that lead to reduce on net income of branches. Jin Kim is trying to develop more efficient systems. The reading text is about the headquarters’ cost allocation method of Korea insurance Co. Inc. Jin Kim‚ manager of the company‚ accused that the costing systems is inefficient as it leads to decrease in incremental cost inappropriately and discourages employees
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Cost Allocation at Water Purification Group Mary May pushed the door to her office thinking about her plan to enrol her daughter for a medical degree at a private university. The private university is the only institution of higher learning that her daughter can apply for‚ considering her high school results. Mary sat down at her table and a smile came to her lips. Her financial situation will definitely improve after the company‚ Bio-Organics‚ announce this year’s bonuses. Project ORG7 she
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Allocate Resources and Develop Budgets The resource allocation and budgeting process is one of the most powerful stages of planning. Resource allocation refers to the distribution of resources‚ and in particular finance‚ from the center to peripheral (outer) levels. Budgeting implies the more detailed determination of precisely how these funds are to be used. - Managers allocate resources to carry out the plan such as o Money o People o Materials o Equipment and o Time - Sales budget is
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CHAPTER 16 COST ALLOCATION: JOINT PRODUCTS AND BYPRODUCTS 16-1 Exhibit 16-1 presents many examples of joint products from four different general industries. These include: Industry Separable Products at the Splitoff Point Food Processing: • Lamb • Lamb cuts‚ tripe‚ hides‚ bones‚ fat • Turkey • Breasts‚ wings‚ thighs‚ poultry meal Extractive: • Petroleum • Crude oil‚ natural gas 16-2 A joint cost is a cost of a production process that yields multiple products simultaneously. A separable
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Course: Material Handling Systems-ISEN 605 Student: Hasnain Millwala UIN: 319002456 Journal Article Analyzed: Mathematical model for warehouse design and product allocation S. S. Heragu‚ L. Du‚ R. J. Mantel and P. C. Schuur International Journal of Production Research‚ Vol. 43‚ No. 2‚ 15 January 2005‚ 327–338 Article Summary: This article primarily deals with two fundamental decisions involved in
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1. Service Cost Allocations CLASS: Teck Tecky Water Services provides water for Departments A‚B and C and has prepared its total budget using the following information for the next year:- Fixed Costs $300‚000 Budgeted Gallon Usage:- Variable Costs $0.10 per gallon Dept. A 2‚500‚000 gallons Available capacity 10‚000‚000 gallons Dept. B 2‚000‚000 gallons Dept C 1‚500‚000 gallons Instructions: Assuming that the single-rate method is used and the allocation base is budgeted
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Economics is the allocation of scarce resources among competing ends. To some extent‚ virtually everything is scarce - money‚ food‚ water‚ dates for the prom... but some resources are scarcer than others‚ and deserve special attention from those with the tools to allocate them properly. Basically scarce resources can be defined as the limit a society has on a particular resource that is less obtainable than others which are readily attainable. Some examples of some scarce resources that are found
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