Business Administration 3307K Study Guide - Methane

• School: Western University
• Department: Business Administration
• Course: Business Administration 3307K
• Professor: All

Document Summary

3 methods: close out to cogs, allocate among amounts, or carry balance forward. Chapter 5: activity-based costing: a tool to aid decision making. Committed fixed costs: investment in facilities, equipment etc. That cannot be significantly reduced, even for short periods of time. Discretionary fixed costs: costs that arise from annual decisions by management to spend in certain areas, such as advertising and research. Under the direct method, any of the allocation base attributable to the service departments themselves is ignored; only the amount of the allocation base attributable to the operating departments is used in the allocation. Step down method: in both the direct and step down methods, any amount of the allocation base attributable to the service department whose cost is being allocated is always ignored. In the step down method, any amount of the allocation base that is attributable to a service department whose cost has already been allocated is ignored.