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Allocation of IT Costs and ABC Costing

1.Describe the process of allocation of IT costs. Do you agree with the approach? Why or why not?

2. What is the purpose of the allocation?

3. What are the benefits of the allocation?

4.Compare and contrast ABC Costing and Lean Manufacturing.

(Answers to questions and references provided in detail in paper).

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1.Describe the process of allocation of IT costs. Do you agree with the approach? Why or why not?

IT allocation is a process by which companies categorically distribute a determined amount of dollars across the corporation to cover all costs associated with or assumed to be related to the IT department. The theory goes that since everyone uses IT at such high intervals, it is near impossible to have complete granularity across an organization. Therefore, financial assumptions are predetermined based on historical usage and on management oversight of the IT department and an allocated budget is created.

There is much scrutiny from all levels of the corporate ladder on just how much allocation of IT costs are captured accurately. That being the case, I agree with the allocation of costs in the majority of situations.

I agree with allocation because I believe it offers the fairest approach at a distributed cost model that allows for a baseline on which to budget and plan year over year. When using an allocation model one has the ability to manage ...

Solution Summary

1.Describe the process of allocation of IT costs. Do you agree with the approach? Why or why not?

2. What is the purpose of the allocation?

3. What are the benefits of the allocation?

4.Compare and contrast ABC Costing and Lean Manufacturing.

(Answers to questions and references provided in detail in APA Format).

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