Allocation of Support Department Costs Common Costs and Revenues推荐.pdfVIP

15 Allocation of Support-Department Costs, Common Costs, and Revenues Learning Objectives How a company allocates its overhead and internal support costs—costs related to marketing, advertising, 1. Distinguish the single-rate method and other internal services—among its various production from the dual-rate method departments or projects, can have a big impact on how profitable those departments or projects are. 2. Understand how divisional incen- tives are affected by the choice While the allocation won’t affect the firm’s profit as a whole, if the between allocation based on bud- allocation isn’t done properly, it can make some departments and geted and actual rates, and bud- geted and actual usage projects (and their managers) look better or worse than they should profit-wise. As the following article shows, the method of allocating 3. Allocate multiple support- costs for a project affects not just the firm but also the consumer. department costs using the direct Based on the method used, consumers may spend more, or less, method, the step-down method, and the reciprocal method for the same service. 4. Allocate common costs using the stand-alone method and the incre- mental method Cost Allocation and the Future of “Smart Grid” 1 5. Explain the importance of explicit Energy Infrastructure agreement between contracting parties when the reimbursement Across the globe, countries are adopting alternat