Accounting & the Cost Allocation Reciprocal Method Formula

Management can even set the accounting system to charge production departments for intra-company services. The reciprocal method is a complex, yet accurate, way ... CultureMusicSportsFood&DrinkEntertainmentLifeHomesNewsWeatherShoppingJobsCarsHearstNewspapersparticipatesinvariousaffiliatemarketingprograms,whichmeanswemaygetpaidcommissionsoneditoriallychosenproductspurchasedthroughourlinkstoretailersites.Accounting&theCostAllocationReciprocalMethodFormulaSmallBusiness|Accounting&Bookkeeping|AccountingByEricBank,MBA,MSFinanceDifferentWaystoObtainManufacturingOverheadHowtoCalculateHowManyWeeksofSeveranceWhatAreSomeWaystoAllocateIndirectCost?ExamplesoftheHigh-LowMethodofAccountingWithFixed&VariableCostsTraditionalInventorySystemOnetaskofaccountingistoassigncostsproperly.Forexample,acompanymustallocatethecostsofeachservicedepartmenttoproductiondepartmentsandtootherservicedepartments.Bydoingso,executivescanjudgehowefficientlyeachservicedepartmentoperatesandsensitizeproductionmanagerstothecostsoftheservicestheyconsume.Managementcanevensettheaccountingsystemtochargeproductiondepartmentsforintra-companyservices.Thereciprocalmethodisacomplex,yetaccurate,waytoallocateservicedepartmentcosts.AllocationBaseDeterminingCostsSolvingtheEquationsAllocationstoProductionDepartmentsReferencesAccountingTools:WhatIsanAllocationBase?PearsonEducation:CostAllocationandActivity-BasedCostingSystemsResourcesOregonStateUniversity:ManagementAccounting:ConceptsandTechniquesMcGraw-HillConnect:MeasuringCostAllocationWriterBioBasedinGreenvilleSC,EricBankhasbeenwritingbusiness-relatedarticlessince1985.HeholdsanM.B.A.fromNewYorkUniversityandanM.S.infinancefromDePaulUniversity.Youcanseesamplesofhisworkatericbank.com.RelatedArticlesWhyIalwaysuseTurboTaxtodomyowntaxesSequentialMethodinAccountingTheAdvantagesoftheDirectMethodofCostAllocationWhatMethodsofCostAllocationAreUsedinNonprofitOrganizations?WhatareAllocatedExpenses?Double-DistributionMethodofCostAllocationHowtoDeterminetheAverageContributionMarginperHourHowtoCalculateCostsforTurnoverDuetoLayOffHowtoSettleIndirectCostRatesDifferentWaystoObtainManufacturingOverheadHowtoCalculateHowManyWeeksofSeveranceWhatAreSomeWaystoAllocateIndirectCost?1WhyIalwaysuseTurboTaxtodomyowntaxes2SequentialMethodinAccounting3TheAdvantagesoftheDirectMethodofCostAllocation4WhatMethodsofCostAllocationAreUsedinNonprofitOrganizations?