How accountants can play a vital role in the allocation of support costs in an organisation?
Other - Business & Finance - 2 Answers
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Answer 1 :
By providing in depth analysis on the source of the cost object, using the cost behaviour analyis and then provide the understanding to the management. Better understanding on cost can make an impact on the perceived profitability of a product, particularly in a multi product, multi segment environments. Cheers...
Answer 2 :
That is one of the most interesting things that a good cost accountant can do. Accounting is a "relatively" unbiased part of an organization. But the allocation of costs start with a understanding of those costs. At the time that they occur, it is best that they are identified by the cause of the expense. Identifying what the costs are and why they occurred is best as early in the process as possible. Now to segregate them, you can do that with department codes, suffixes, etc. The caution is that you need to make sure that the information is accurate and appropriate. There are often games played by managers. It is also important that you understand the basis on which you are allocating costs. Some need to be on material. Some on labor. Some in overhead allocation. Some should not be allocated at all. It is in identifying and understanding both the reason for the costs and what is the best way to allocate those costs, that the accountant can provide the best information
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