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Business Accounts Issue

Cost Allocations
Here are a few items for discussion:

Give some synonymous terms for traceable and non-traceable costs.

Is the focus on variable or fixed costs in this module?

Give a name for an expanded contribution margin income statement.

Discussion questions:

Are we using actual or estimated costs for planning purposes?

Why do companies allocate costs?

If non-traceable costs are not allocated to the various operating units within an organization, who ends up paying these costs?

Solution Preview

Cost Allocations

Here are a few items for discussion

Give some synonymous terms for traceable and non-traceable costs.
Synonymous terms for
i) traceable costs are :direct costs ( the costs which can be directly traced to the products) and
ii) for non-traceable costs ( which cannot be directly traced to products) , indirect costs

Is the focus on variable or fixed costs in this module?

Under marginal costing, variable costs are considered as the variable cost will be incurred only if there is production.On the other hand, fixed costs ...

Solution Summary

This solution answers a number of questions on cost allocation - fixed, traceable, estimated etc. - in 344 words.

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