GEO 793 Lecture : Fixed Cost Allocation.docx

• School: Ryerson University
• Department: Geography
• Course: GEO 793
• Professor: Cynthia Mason

Document Summary

Fixed cost allocation: assign as many fixed costs as possible directly to a product or a service. Arbitrary allocation: assignment in proportion to an unrelated metric (ex: sales, labour) problem: open to political manipulation and cost distortion. Measured allocation: directly related activity-based cost allocation (ex: abc, using a process like the balanced. Scoreboard to understand the product/ service processes and activities problem: overall better than arbitrary allocation, but is not commonly used as there is still a debate over added value.