Faiture is aot an option. SERVICE COST ALLOCATION Producing depertment - directly responsible for creating products or services Supper? epartmenb & service dept. -» perform vpecitic functional tests for otner internal output & adminis tranive oepr > management activities METHODS OF ALLOCATION + Pireet metho ~~ allocates support coos otivecty to the revenue ~ producing deportmenss 7 no comerWeresion it given te sevice partormed from ene service sept tor another * Step meted —-» allo tes dicectly te both service ond producing dept: (Sequentiet Method) + Reciprocal metnod —> all dept reciprocally provide Services te cach omer 7 expressing relations (trettersst Method o: ips in algebraic terms algebraic method 1 fo co ralate with each other DIRECT METHOD Zhang Chale Sank haste suppxt areas (adminsatin. human esos, an xcountng) ae 68 ever guerting aes (checking accounts savings accor and kare). Merihly et ost andthe intrspartmentalsuppoct structure re shown nthe flloning bei rods aking Percent of Service Ua By Deporiment — [Dre core Amin [HR | Aeeig | Checking | Savin mation $1000 fof ian Resources TR) | 36000000 —| 10 i0—| 9 |. 2 i 3000000 | —10 | 6 o rk 00000 m 3375000. “500000 Using tne det method computation fo the ttl ost for ach even generating area ofthe banks 35 follows ~~" DIRECT METHOD " DIRECT METHOD = je "ee a oemSTEP METHOD inate wet in ot et ptt va ‘ljnato sane pear we tne nye ace + S92 Mercere an geno ae STEP METHOD STEP METHOD 2c utr par we eon ame cin etre eng sna ann tar yn (pear ape tls senna roped iy Se Le esate a a ps ape pe faenmearnoeteceme ott» = t= 1» fm Siena ie sone sgt option el wep nem eg bk RECIPROCAL METHOD cans lounsineratin Peak Cm Mawecrsingisty Sep Mame wane SOpe rum “ rasingorgamen Nat Maw Som Sea “it oR He TOS TA ‘vei mow — ae ae ‘on te cama arse soe De meme som we = etna ane eee TPS Sco 8 — ae — RECIPROCAL METHOD RECIPROCAL METHOD ‘acng ape wk soe ere moss me stig depres Seo Zone