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Al-Jo’anee Company: support department cost allocations with matrices, to improve decision making

Saad S. Hussein --- Dennis F. Togo

Tikrit Journal For Administration & Economics Sciences مجلة تكريت للعلوم الادارية والاقتصادية
ISSN: 18131719 Year: 2017 Volume: 1 Issue: 37 Pages: 287-298
Publisher: Tikrit University جامعة تكريت

Abstract

ABSTRACT :The aim of this paper is to solve the complexity of cost allocation problem where the support center at Al-Joa’anee company have a reciprocate services along with the production (operation) centers. The study used a spread sheets of excel to apply matrices to allocate the indirect costs. The company has seven centers in which two of them are production centers; the rest are called the supporting centers where they work to facilitate the production process. Many methods in cost accounting have been proposed, Via the direct method, the step-down method, the individuality method and the reciprocal methods. However not all the methods has the same applications at the process of cost allocation on the production methods, for instance, the direct methods assume there is no inter-services among the support centers. The proposed methods though has its own complexity for application but it can solve the problem of reciprocate services among the support centers. The study has proposed a systematic approach to apply the reciprocal method for Al Al-Jo’anee Company.

Keywords

matrix-based cost allocations --- reciprocal method