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Cost Allocation and Accounting

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Why is the cost-allocation method used by an organization an important part of its cost accounting system?

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Solution Summary

How cost allocation methods affect accounting systems.

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The cost-allocation method determines in large part how a company views its earnings in relation to expenses. Cost allocation is the way that different costs are spread among different parts of the organization. The primary difference between methods is how support services are or overhead are allocated to other support departments. If a company ...

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