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Process of allocation of IT costs: lean or abc

Based on the articles attached...

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

What is the purpose of the allocation?

What are the benefits of the allocation?

Compare and contrast ABC Costing and Lean Manufacturing.

How is the decision making in this organization affected by the manner in which costs are allocated? Provide numerical support as needed.
Clearly identify the company, the time period, and include the link to the report analyzed.

Your response is 480 words.

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Your response is 480 words.

Allocation of Fixed Costs

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

The articles describe two different approaches: Lean accounting and activity based costing. Both have pros and cons and the selection of "what is best for allocating IT" likely rests with the culture and types of businesses. I personally believe that activity-based costing, which essentially casts IT as a variable cost, making users sensitive to the requests they make of IT because every request is an incremental cost to their budget. It also requires the IT department to be commercially viable (so users don't contract outside for their needs). The downside is that ABC is time-consuming ...

Solution Summary

Discussion is 480 words in everyday language suitable for novice that explains the two different ideas about how to allocate fixed IT costs and the outcome of allocating under these policies.

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