Cost Accounting For Dummies

Chapter 14

Behind the Scenes: Accounting for Support Costs and Common Costs

In This Chapter

Distinguishing between single rate and dual rate cost allocation

Considering support cost allocation methods

Allocating common costs

Thinking about customer contracts

Working with government customers and costs

Many vital business activities happen behind the scenes. These are known as support activities, and they reinforce the departments that make products or deliver services.

The work isn’t visible to the customers, but it can make or break your business. If you perform this work poorly or overspend on the process, your business may incur a loss. Allocating the costs of these activities correctly is critical. The allocation affects accurate product costing and better product pricing.

There are several types of behind-the-scenes costs. Support costs are costs incurred for activities that assist other company departments. Common costs are costs shared by multiple departments. This chapter ...