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?

---

Definitions:

High Value

Describes products, services, or actions that yield significant benefits or returns relative to their cost or effort.

Competitors

Other businesses or individuals that offer similar products or services, competing for the same customers or market share.

Process Reengineering

The fundamental rethinking and radical redesign of business processes to achieve dramatic improvements in critical measures of performance such as cost, quality, service, and speed.

Flexibility

Flexibility in a workplace context refers to the adaptability of an organization and its employees to changes or new demands, including work schedules, tasks, and strategies.