Purchase Solution

Why is accurate cost allocation important? Effect in pricing products or services.

Not what you're looking for?

Ask Custom Question

Why is accurate cost allocation important? How does cost allocation come into play regarding how we price individual products or services?

Purchase this Solution
Solution Summary

This solution discusses why accurate cost allocation is important and discusses the effect in pricing products or services.

Solution Preview

Why is accurate cost allocation important? How does cost allocation come into play regarding how we price individual products or services?

Proper allocation of cost is important for ascertaining the real costs of products and services. When the company manufactures more than one product, common costs should be allocated to all the products manufactured on some ...

Purchase this Solution
Free BrainMass Quizzes
Production and cost theory

Understanding production and cost phenomena will permit firms to make wise decisions concerning output volume.

IPOs

This Quiz is compiled of questions that pertain to IPOs (Initial Public Offerings)

Balance Sheet

The Fundamental Classified Balance Sheet. What to know to make it easy.

Employee Orientation

Test your knowledge of employee orientation with this fun and informative quiz. This quiz is meant for beginner and advanced students as well as professionals already working in the HR field.

Marketing Management Philosophies Quiz

A test on how well a student understands the basic assumptions of marketers on buyers that will form a basis of their marketing strategies.

View More Free Quizzes
Related BrainMass Solutions

  • Implement an ABC system

    Cost driver gives more accurate results. 2) It helps in finding out the true cost of the product. 3) It helps in identifying waste and non value added activities 4) It helps in formulating pricing strategies 5) It helps in benchmarking and also

  • A Discussion on Product Costing

    ABC costing is the most accurate tool of allocating the fixed costs among the products because it identifies cause and effect relationship to assign the cost. 2.

  • Quality improvement program for Dell

    c. often results in substantial savings and higher revenues in the short run. d. does all of the above. 19. Quality of design measures how closely the characteristics of products or services match the needs and wants of customers.

  • Business help: Activity Based Costing

    actual cost of products and services.

  • Activity-Based Costing (ABC) and Traditional Costing

    Also, can you explain why it might result in more accurate product costing information than the product cost derived under the traditional costing approach?

  • ACTIVITY BASED COSTING VS TRADITIONAL COSTING

    Therefore, traditional system of costing is not helpful in arriving at the accurate cost of product/service and therefore, the management is given the wrong information about the costs of various products resulting in the wrong decisions.

  • What cost allocation methods are used for National Linen

    Why is the cost allocation method used by an organization an important part of its cost accounting system? Also, going back to the company (National Linen) what type of cost allocation method is or might be used and would you give some examples?

  • What approach to allocating overhead expenses will be more accurate?

    Which approach is likely to provide more accurate cost numbers for cost estimating, pricing, and performance evaluation? When a single plantwide overhead pool is used costs are applied to products based on a predetermined overhead rate.

  • The advantages and disadvantages of activity-based costing

    Oftentimes, a firm must employee a full-time cost accountant or the services of an outsourced firm to formulate a good strategy for arriving at the accurate cost and for maintaining records of these costs.

View More Related Solutions