Task:
Cost Reallocation
The links below lead you to the required background readings for the assignment.
First read the article below:
How to Create a System for Charging Back IT Services.
https://www.cio.co.uk/article/3217465/how-to-create-a-system-for-charging-back-it-services/?intcmp=HPF3
Next read comments about the above reference article.
ABC Costing is the Best Allocation Methodology.
https://leanit.apptio.com/tag/activity-based-costing/
Required:
You are required to read the above articles and to discuss the various issues of cost allocation in a 2 to 4 page paper by addressing the issues below:
1. Describe the process of allocation of IT costs. Do you agree with the approach? Why or why not?
2. What is the purpose of the allocation?
3. What are the benefits of the allocation?
4. Compare and contrast ABC Costing and Lean Manufacturing.
How is the decision making in this organization affected by the manner in which costs are allocated? Provide numerical support as needed.