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how does the direct method of cost allocation work
jkijuli
There are three methods of service department allocation are in general use . 1- Direct method Ther direct method is the simplest the direct method allocates service department costs directly to the producing departments without regard for services rendered by service departments to each other. service department costs are allocated to production departments based on an allocation base appropriate to each esrvice department's function. 2- The step or step-down method Allocates some of costs of services rendered by service dapartments of each other. The step method derives its name from the procedure involved : the service departments are allocated in order, from the one that provides the most service to other service department down to the one that provides the least . 3- the reciprocal method Is the most complex and the most theoretically sound of the three methods. it is also known as the simultaneous solution method, cross allocation method, matrix allocation method,or double distribution method. The reciprocal method recognizes services rendered by all service departments to each other. BY AMIR KAMAL MASSOUD
Not sure what you're asking - a "Profit and Loss" is a slang name / jargon for an Income Statement.
Because in ABC costing overheads are allocated based on activities performed by departments rather based on any rate or formula that's why as much activity any department perform as much cost will be allocated which is more accurate way of allocation.
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The distillation method's advantages are that it will make a pure result. The disadvantages are that the method is time consuming and is not cheap. The distilled method as a result is avoided unless needed.
how does the direct method of cost allocation work
The distillation method's advantages are that it will make a pure result. The disadvantages are that the method is time consuming and is not cheap. The distilled method as a result is avoided unless needed.
the advantages of this method was that it is more quick and less calculation needed and the disadvantages, it less accurate compare to the rise and fall method.
this method is rediculous
Everything has its advantages and disadvantages both, so accept these logics and their aspects in your life.
useful
The disadvantages of the polygon method include a lack of accuracy as well as detail. Advantages include its ease of use. The component method is much more exact, but is tougher to achieve.