What cost allocation methods are used for National Linen
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National Linen launders commercial tablecloths, bedding, garments and rags for restaurants, medical facilities, hotels and auto repair shops.
Why is the cost allocation method used by an organization an important part of its cost accounting system?
Also, going back to the company (National Linen) what type of cost allocation method is or might be used and would you give some examples?
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Your discussion is 342 words and gives examples of what costs are allocated and why for National Linen.
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Why is the cost allocation method used by an organization an important part of its cost accounting system?
Cost allocation methods reflect management philosophy about how to measure performance and results. For instance, if the firm decides not to allocate fixed costs because managers cannot control them, this favors creating performance reports and costs based on a decentralized style where managers are rewarded based on how well they do with what they control. By contrast, if a firm allocates all costs, regardless of how well each area can control the cost, ...
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