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an allocation procedure that ignores the relationship amoung support activities and focuses instead on the relationship between support and line activities |
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a procedure that employs two separate drivers to allocate fixed and variable costs in a cost pool |
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an activity that is directly related to making and selling the firm's products and services |
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an allocation procedure that fully accounts for the relationship amoung support activities |
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reciprocity in consumption |
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a consumption pattern in which two departments provide services to each other |
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a support department consuming its own output |
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also known as step down method |
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an allocation prcedure taht partially accounts for the relationship amount support activities |
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an activity that is not a line activity. these activities help the firm execute the line activity |
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why is it import to account for reciprocity amoung support activities |
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1 it increases the accuracy of cost estimates 2 allocating the cost of support departments helps line managers become aware of teh costs of the services they consume |
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three methods to allocate support cost |
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1 direct 2 step down 3 reciprocal |
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when computing percentages for allocating cost we ignore... |
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In the direct method do we allocate cost to other support lines |
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using the direct method we ignore.... |
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consumption used by other support lines |
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steps to step down method |
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1 rank ordering support activities 2 start by allocating highest ranked cost to lower ranked cost |
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the key step to performing a step down method |
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is to rank the support cost pools according to some criterion |
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the reciprocal method is conceptually the most appealing because.... |
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it takes into account all of the reciprocity in consumption |
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although recip is the most appealing it is also the most.... |
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