An Examination Of Support Department Cost Allocations
Journal of Cost Analysis and Management
This study examines three factors that influence support cost allocations: the complexity of the support service usage, the accounting system capability, and management beliefs about the usefulness of allocations. Critics believe that any allocations are arbitrary and cause incorrect decisions; however, allocations are integral to new cost systems such as Resource Consumption Accounting (RCA) and Granzplankostenrechnung (GPK). We find that support cost allocations are inadequately incorporated into most cost systems. The reason is not that there is little cross-departmental use of services or that accounting systems are inadequate. Rather, the belief of financial managers that the information is useful is the main factor critical to firms' use of support cost allocation systems. These results have implications for systems implementation and education.
Cairney, Timothy D., Debra T. Sinclair.
"An Examination Of Support Department Cost Allocations."
Journal of Cost Analysis and Management, 8 (1): 37-54.