BUS 322 Lecture Notes - Lecture 5: Service Provider, Complex System, Liquid Oxygen

• School: Simon Fraser University
• Department: Business Administration
• Course: BUS 322
• Professor: Mahmoudian Fereshteh

Document Summary

The chapter explains the importance of managing support service costs and why these costs are allocated. It provides understanding of the need to choose single or multiple cost pools and to separate the cost of resources supplied and the cost of resources used. It illustrates how to choose appropriate allocation bases. Chapter 10 illustrates two methods used to allocate support department costs the direct and step. The chapter evaluates the consequences of choosing among the cost allocation methods. Reciprocal method of cost allocation is explained in the appendix. Service cost challenges exist in virtually every type of organization. For-profit organizations exist to provide goods and services that generate profit. Non-profit organizations and government units operate to provide goods and services that benefit members of a community or society at large. Most of the focus on use of resources in organizations is properly placed on the resources used to meet the objectives of the organization.