ALLOCATION OF SERVICE DEPARTMENT COSTS …（服务部门成本分配u2026）.docVIP

ALLOCATION OF SERVICE DEPARTMENT COSTS TO PROFIT AND INVESTMENT CENTERS A potential source of disharmony among responsibility centers in decentralized firms is the allocation of service department costs. Most businesses have departments that do not produce goods but rather service other departments. Examples are data processing, accounting, planning, personnel, and cafeteria and medical facilities. Service departments carry out essential auxiliary services for an organization. There are several reasons for allocating service department costs. Other departments receive benefits from service departments and should be charged for the benefits received. Allocation helps other departments realize the cost of the services received and decide how much service to request. Allocation usually results in a more effective distribution of services among departments. Allocation helps in costing the company’s products, because service department costs should be viewed as part of a product’s cost. The general principle is that service department costs should be allocated using a base that measures the amount of services or benefits received by each user department. To illustrate, we will assume that Palmer Company has four departments: home products, commercial, manufacturing, and the cafeteria. The cafeteria services the other three departments and incurs a loss of $100,000, which could be allocated on the basis of sales revenue or number of employees. During 2003, the three user departments had the following operating data: Home Products Commercial Manufacturing Sales Revenue $600,000 $400,000 $200,000 Variable Costs 320,000 200,000 80,000 Fixed Costs 180,000 120,000 60,000 Number of Employees 70 60 20 If cafeteria losses are allocated on the basis of sales revenue, the three user departments would bear the following cafeteria costs. Home Products Commercial Manufacturing $600,000