ACCT 002 Lecture Notes - Lecture 8: Process Manufacturing

• School: College of The Sequoias
• Department: Accounting (ACCT)
• Course: ACCT 002
• Professor: teller

Document Summary

Methods of support department cost allocation (3 methods) Direct method: this method assigns support department costs only to departments that are producing. Simplest and most straightforward way to assign. This method recognizes that interactions from support dept. Cost allocations are done in a step-down fashion, following a predetermined ranking procedure. The sequence is defined by ranking the support departments in order of the amount of service rendered. The sequential method does not account for all support department interaction. Total cost reflects interactions of all support departments. Not widely used due to its complexity and limited value. Process costing works well with homogenous products pass through a series of processes and receive a similar amount of manufacturing costs. Sequential processing: units need to pass through one process before they can move on to the next. Parallel processing: units can go through different processes simultaneously then combined at the end to complete a finished product.