cost allocation in small business

cost allocation in small business Research Paper example
College
Research Paper
Finance & Accounting
Pages 4 (1004 words)
Download 0
COST ALLOCATION IN SMALL BUSINESSES [Your name goes here] [Your class name goes here] [Your college name] Cost Allocation in Small Businesses Cost allocation is basically a process in which costs of services are identified and assigned to operate any particular business activity…

Introduction

Cost allocation through a proper accounting system is considered an important task in every small business. The process of cost allocation needs a company to allocate costs in such a way that cost covers all business components properly. Costs can be allocated does not cover any single aspect of a business, rather it covers multiple areas which incur some expenses. Cost allocation has a number of considerable benefits for small businesses. Let us discuss some of those benefits in order to understand the worth of this process. Awareness of Expenses One of the main benefits that companies get through proper cost allocation is awareness of expenses. Accurate assignment of costs to business processes makes it possible for the managers to know exactly the types of expenses incurred in any particular business operation. Here, it needs to be mentioned that such information is not just critical for the development of operating budgets; rather it is also imperative in the calculation of taxes payable to state, local, and federal tax agencies. The way a company assigns costs to different business units have a profound impact on the amount of taxes that the company pays (Tatum, n.d.). ...
Download paper
Not exactly what you need?

Related papers

Cost allocation
It has to be determined in the beginning as to which divisions in the hospital can be differentiated as service centers or revenue centers and it should be decided how the service costs will be assigned in the hospital and the correct cost drivers should be chosen as well. The direct allocation of costs may not be a clear reflection of the revenue center’s actual use of service. While Western…
Criticism of Absorption Cost System
As common sense would have it, fixed cost remains fixed no matter what the level of production is. Hence, in such a case managers often tend to over produce thinking it’s better to allocate the fix overhead over a wider range of output and reducing the cost per unit (since spreading fixed cost over greater units tends to drive down fixed cost per unit and when fixed costs per unit go down then…
Experience of Small Business
Restaurant business is one of the most rewarding type of small businesses. Personally, I have witnessed one of my uncles advance so much economically because of owning one of them. His restaurant is a fast food restaurant located in the middle of one of the busy streets in Saudi Arabia. The main types of food served at the restaurant are chicken, chicken burgers, fries, burgers, pizza,…
Small-Business Idea Paper
Advantages and Disadvantages of Four Different Forms of Business Organizations There are fundamentally four types of business forms currently practiced by entrepreneurs, such as sole proprietorship, partnership, C-Corporation, and S-Corporation. However, with due consideration to their practical implementation, various advantages and disadvantages can be identified which are elaborated in the…
Small Business Finance
Another is the Firestone Energy Limited, which classifies, assesses, develops mineral survey and mining schemes mainly situated in Australia and Africa, and discovers coal (Firestone energy, 2011). Legal Ownership Structure As at the time of the prospectus; Exterra Resources Limited owned rights to obtain full interest in the Linden Gold operation to be found at the southern part of the Laverton…
'Effective Finance Management in Small Business Restaurant in Ireland'
The literature review section reveals a comprehensive discussion on financial management and its role in small restaurant business. The role of The Restaurant Association of Ireland has been also included in order to several its contribution in context of financial management. The research methodology section has evaluated the ways of data collection for this study. For this research,…
Small-Business Idea Paper
Advantages and disadvantages of sole proprietorship Sole proprietorship is the most popular and the longest practiced form of business organization. Some of its advantages are the ease with which it can be established and the ease with which it can be wound up. The processes are cheap, and are free from legal formalities because only establishing a business requires registration of business name…