The Manager of the Finishing Department Is Concerned About How

question 165

Essay

The manager of the Finishing Department is concerned about how the costs of service departments are being assigned to the Mixing Department.He knows that his department uses support activities entirely different from the other production departments.As a matter of fact, when something goes wrong in the Mixing Department the entire plant has to stop production because of the critical nature of the chemical processing in that department.Several support departments, such as maintenance and clean-up stop whatever they are doing and come to help the Mixing Department.However, it appears that the Mixing Department is not assigned any additional support costs because all support costs are assigned on the basis of actual outputs.Required:
Explain the methods available for the allocation of costs from one department to another.Which method would you recommend for this company and why?

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Definitions:

Earthworms

Terrestrial invertebrates that play a key role in soil aeration and nutrient recycling through their burrowing actions.

Typhlosole

An internal fold of the intestine or another structure that increases surface area for digestion and absorption in some animals.

Hermaphroditic

Type of animal that has both male and female sex organs.

Earthworms

Segmented invertebrates belonging to the phylum Annelida, crucial for soil aeration and nutrient recycling.