ACC513 Managerial Accounting Lesson 6 –Allocating Costs to Responsibility Centers Introduction In this lesson students explore the nature of common or indirect costs. They also become aware of why companies allocate common costs to departments and products. Examples of how service department costs are allocated to production departments are presented. The allocation of marketing and administrative expenses as well as the allocation of joint-process costs is discussed. Lesson Learning Objectives By the conclusion of this Lesson you should be able to: Explain the nature of indirect costs. Allocate service department costs to production departments. Explain why activity-based costing is used Read More …
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ACC513 Managerial Accounting: Investment Center Performance Evaluation and Incentive Issues Questions
ACC513 Managerial Accounting Lesson 5 –Investment Center Performance Evaluation and Incentive Issues Introduction This lesson discusses concepts and methods of measuring performance and controlling activities in multidivision organizations. Return on investment (ROI) as a performance measure is interpreted. Further, divisional organizations engage in transfer pricing. These rules are introduced and the behavioral issues are analyzed. The economic consequences of multinational transfer prices are explained. There are incentive issues in allocating costs to divisions when measuring divisional performances. The contribution approach to divisional reporting improves management decisions. ROI is compared to economic value added. Students will explore issues in the design Read More …