tailieunhanh - Lecture Advanced management accounting - Chapter 14

This chapter presents the following content: The purposes of performance measurement, conventional performance measurement, contemporary performance measurement, non-financial measures for operational control, strategic performance measurement systems, does non-financial performance lead to financial performance? benchmarking, warning signs of an inadequate performance measurement system, designing and effective performance measurement system. | Lecture 14: Process Costing (Service Department Allocations) Operating Departments An operating department carries out the central purpose of the organization The Accounting Department at your University. An Assembly Department at General Motors. 2 4-2 2 Operating departments carry out the central purpose of the organization. Examples of operating departments include: The Surgery Department at Mt. Sinai Hospital The Geography Department at the University of Washington The production departments at Mitsubishi Service Departments A service department does not directly engage in operating activities. The Accounting Department at Macys The Human Resources Department at Walgreens. 3 4-3 3 Service departments do not directly engage in operating activities. They provide services or assistance to the operating departments. Examples of service department include: Cafeteria Internal Auditing Human Resources Accounting. Interdepartmental Services Service Department Operating Department Costs of the service department become overhead costs to the operating department 4 4-4 4 The overhead costs of operating departments frequently include allocations of costs from service departments. To the extent service department costs are classified as production costs, they should be included in unit product costs and thus must be allocated to operating departments in a process costing system. Allocation Approaches Direct Method Step-Down Method Reciprocal Method 5 4-5 5 Three approaches are used to allocate service department costs to other departments—the direct method, the step-down method, and the reciprocal method. Reciprocal Services Service Department 1 Service Department 2 When service departments provide services to each other we call them reciprocal services. 6 4-6 6 Keep in mind that many service departments provide services to each other, as well as to operating departments. Services provided between service departments are known as interdepartmental or reciprocal . | Lecture 14: Process Costing (Service Department Allocations) Operating Departments An operating department carries out the central purpose of the organization The Accounting Department at your University. An Assembly Department at General Motors. 2 4-2 2 Operating departments carry out the central purpose of the organization. Examples of operating departments include: The Surgery Department at Mt. Sinai Hospital The Geography Department at the University of Washington The production departments at Mitsubishi Service Departments A service department does not directly engage in operating activities. The Accounting Department at Macys The Human Resources Department at Walgreens. 3 4-3 3 Service departments do not directly engage in operating activities. They provide services or assistance to the operating departments. Examples of service department include: Cafeteria Internal Auditing Human Resources Accounting. Interdepartmental Services Service Department Operating Department Costs of