Accounting Literature & Language Essay Research Paper (Essay Sample)

Cost Allotment
Student’s Name
Institutional Affiliation
Cost Allotment
An allotment is a process utilized to measure the cost in the production departments to evaluate and measure the values of different commodities utilized in the manufacturing process. Besides, the cost allotment process also applied in evaluating the returns (profits) of a manufacturing firm thorough the evaluation of both the production and service cost centers. This paper thus will evaluate the various methods of cost allocations over departments which are composed of: the direct method, Step method, Reciprocal method, and the step method allocation as well as calculations based on the costing system.
Direct method
This method is the simplest of all as it only charges the service costs to production without making distributions among the supporting service units. This method does not take into account the amount of work done by a service section for other service departments or even it. However, the direct method is well known to allocate costs to the support service sections, based on the corresponding total amount allocations in different production sections as argued by (James, 2002).

95,000

Branch manager salary

28,000

32,0000

20,000

80,000


75,750

156,250

103,000