Ch 13: Service Department & Joint Cost Allocation

About This Chapter

This chapter can help you retain important information about service department and joint cost allocation. Students seeking assistance with improving their overall grade in accounting classes or seeking to pass a a test can use our lessons to memorize definitions, key concepts, and major accounting terms.

Service Department & Joint Cost Allocation - Chapter Summary

This chapter covers service department and joint cost allocation. Brief text and video lessons address a variety of cost allocation methods as well as pricing formulas and cost-benefit analysis. As you make your way through the comprehensive lessons in this chapter, assess your progress by using the lesson quizzes. These multiple-choice quizzes gauge your knowledge of definitions, concept applications, terms, and problem-solving. After completing the chapter, you'll be prepared to do the following:

  • Describe the terms associated with cost allocation
  • Identify the steps for the direct method of cost allocation
  • Define the step-down method of cost allocation
  • Explain when to use the reciprocal distribution method
  • Use the formula to determine cost-plus pricing
  • Measure the accounting rate of return and payback via cost-benefit analysis
  • Summarize the cost classifications listed on the goods and inventory statements
  • Point out the different types and methods used for inventory cost calculations

8 Lessons in Chapter 13: Service Department & Joint Cost Allocation
Test your knowledge with a 30-question chapter practice test
Cost Allocation: Definition, Terms & Examples

1. Cost Allocation: Definition, Terms & Examples

Have you ever wondered how a business determines costs? In this lesson we will learn about cost allocation. We will define the term and apply it to some examples. The lesson will conclude with a summary of key concepts.

Direct Method of Cost Allocation: Process, Pros & Cons

2. Direct Method of Cost Allocation: Process, Pros & Cons

While the direct method of cost allocation may be the easiest for the accounting department to use, this lesson will outline the process and show how it is often inaccurate in truly spreading the burden of overhead costs among different groups.

Step-Down Method of Cost Allocation

3. Step-Down Method of Cost Allocation

The step-down method of cost allocation lets accountants do something that some other forms of cost allocation won't: allocate overhead costs to service departments. However, it's still not a perfect system.

Reciprocal Distribution Method of Cost Allocation

4. Reciprocal Distribution Method of Cost Allocation

The reciprocal distribution method of cost allocation solves one of the primary issues in cost allocation: how to allocate costs between service departments. This lesson teaches how to use the method.

Cost Plus Pricing: Definition, Method, Formula & Examples

5. Cost Plus Pricing: Definition, Method, Formula & Examples

How do you determine the retail sales price of your product or service? There are many strategies you can apply to set a price. This lesson will introduce you to the cost-plus pricing strategy.

Cost-Benefit Analysis: Payback & Accounting Rate of Return

6. Cost-Benefit Analysis: Payback & Accounting Rate of Return

In business, there are a variety of methods used to calculate the expected return on an investment. In this lesson, we'll discuss two common methods: payback period and the accounting rate of return.

Cost Classifications on Goods & Inventory Statements

7. Cost Classifications on Goods & Inventory Statements

Manufacturing companies convert raw materials into finished goods that are sold to consumers. Inventory in various stages of completion must be reported on company financial statements.

Inventory Cost: Definition, Methods & Types

8. Inventory Cost: Definition, Methods & Types

Have you ever thought about how much it costs a business to keep inventory in stock? It's not just the price the business pays for the items that it keeps in stock. It is so much more. In this lesson, we will discuss exactly what constitutes actual inventory cost.

Chapter Practice Exam
Test your knowledge of this chapter with a 30 question practice chapter exam.
Not Taken
Practice Final Exam
Test your knowledge of the entire course with a 50 question practice final exam.
Not Taken

Earning College Credit

Did you know… We have over 200 college courses that prepare you to earn credit by exam that is accepted by over 1,500 colleges and universities. You can test out of the first two years of college and save thousands off your degree. Anyone can earn credit-by-exam regardless of age or education level.

To learn more, visit our Earning Credit Page

Transferring credit to the school of your choice

Not sure what college you want to attend yet? Study.com has thousands of articles about every imaginable degree, area of study and career path that can help you find the school that's right for you.

Support