[Verse 1] Corporate cafeteria feeds production floors HR handles payroll while maintenance restores These service departments rack up their expenses But products need costing, where do we dispense it? Factory A makes widgets, Factory B makes gears Service costs must land somewhere, accountants volunteers Three methods emerge from this allocation maze Each with different logic, different calculation ways [Chorus] Direct method cuts the cord, ignores what services share Step method flows in sequence, hierarchy declares Reciprocal spins circles, mutual services care D-S-R remember, allocation methods fair When service costs go walking, these methods show you where [Verse 2] Direct method takes the shortcut, service to production only IT costs hit both factories, split by usage, never lonely Maintenance expense follows, based on square footage consumed Service-to-service whispers? Direct method assumes Cafeteria serves five thousand meals monthly Three thousand feed production, two thousand serve support But direct method tunnel vision sees production exclusively Support department hunger never gets transport [Chorus] Direct method cuts the cord, ignores what services share Step method flows in sequence, hierarchy declares Reciprocal spins circles, mutual services care D-S-R remember, allocation methods fair When service costs go walking, these methods show you where [Verse 3] Step method builds a staircase, rank services by size Largest service department gets allocated first prize HR spreads to everyone, then IT takes its turn Each step down eliminates, no backward costs return Maintenance cleans IT offices, IT runs maintenance screens Step method captures some of this in allocation scenes Sequential distribution, partial reciprocity gained Better than direct method, more accuracy attained [Bridge] Reciprocal method solves equations, simultaneous and true Matrix algebra dancing, every service gets its due IT supports maintenance department, maintenance cleans IT space Circular relationships captured, mathematical embrace [Verse 4] Systems of equations spinning, coefficients tell the tale Maintenance uses ten percent IT, numbers never fail IT consumes five percent maintenance, back and forth they trade Solve for total costs allocated, precision finely made Most accurate method singing, complexity the price Software handles calculations, mathematical device GAAP accepts all methods, choice depends on situation Materiality guides decisions, cost-benefit evaluation [Chorus] Direct method cuts the cord, ignores what services share Step method flows in sequence, hierarchy declares Reciprocal spins circles, mutual services care D-S-R remember, allocation methods fair When service costs go walking, these methods show you where [Outro] Service costs need homes to find Direct, step, reciprocal designed Choose your method, run the math Product costing finds its path
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