Cost Allocation and Process Costing

Course Contents, Concepts and Issues

Allocation of Support Department Costs, Common Costs and Revenues

• Allocating Costs of a Supporting Department to Operating Departments
• Methods to Allocate Support Department Costs
• Allocation Method Trade-Offs
• Allocation Bases
• Comparative Allocation Bases Illustrated
• Methods of Allocating Support Costs to Production Departments
• Choosing Between Methods
• Allocating Common Costs
• Methods of Allocating Common Costs
• Cost Allocations and Contracting
• Revenue Allocation and Bundled Products

Cost Allocation: Joint Products and By-Products

• Joint Cost Terminology
• Examples of Joint Cost Situations
• Joint Process Overview
• Reasons for Allocating Joint Costs
• Joint Cost Allocation Methods
• Method Selection
• Sell-or-Process Further Decisions
• Sell-or-Process Further Flowchart
• By-products
• Comparative Income Statements for Accounting for By-products

Process Costing

• Job vs. Process Costing
• Process Costing
• Five-Step Process-Costing Allocation
• Equivalent Units
• General Ledger Cost Flows Illustrated
• Result of the Process (As Before)
• Transferred-In Costs
• Hybrid Costing Systems