ACC 117 Lecture Notes - Lecture 2: Cost Driver, Job Satisfaction
Document Summary
The cost allocation process has 2 steps. Divide the amount in the cost pool by the denominator value. Cost allocation is distributing a common cost; 4 aspects in cost allocation. Cost pool total cost to allocate. Cost objects the items or entities to which we allocate the costs in the cost pool. Cost driver attributes that we can measure for each cost object (allocation. Allocation volume the sum of cost driver amounts across all cost objects basis) Multiply the number of cost driver units contained in each cost object by. Performance evaluation in decentralized organizations the allocation rate. Costs: leads to decisions that emphasize local goals over global goals, requires costly coordination of decisions. Increases with an organizations size and complexity: triggers improper decisions because of the divergence between the individual and organizational goals, may lead to an increase in total costs, effort and tasks are often duplicated.
