AYB225 Lecture 9: AYB225 - Lecture 9 Notes
Document Summary
This topic will cover: (1) how to determine the share of service department costs, and then (2) including the sd allocation in the numerator when calculating the oh rates of production departments (consequential on (1)). This topic, by convention, considers only (2) and (3). (1) and (4) are ignored. With respect to (4), in problems in this unit, data which is not relevant for the production departments have already been removed. Only consider this issue where service (support departments) exist, but also only when: the production departments want to include a share of sd costs in their oh rates, and, there is more than one production department. What service department allocation does not do: (1) (2) It is an accounting allocation exercise only, for the purposes of inventory valuation. The calculation shows zero costs remaining in the service departments, but costs are not physically removed.
