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General Electric's Allocation of Costs - Essay Example
Finance & Accounting
Pages 6 (1506 words)
General Electric’s Allocation Of Costs Introduction Cost allocation is the most important task in any organization, as this task ensures that all the relevant heads get the relevant budgets for a proper allocation of resources. The purpose of cost allocation is for many reasons…
General Electric and Cost Allocations At General Electric’s managers are very much concerned about the allocation of costs as these allocations are required for the proper delegation of resources and cost to the respective department. Manager at GE realize that the cost allocation to different divisions, plants, departments, contracts and/ or products will result in increased motivation for the organization, it will also justify costs of various expenditures as these would than be used by the auditors to audit and overlook all the managerial activities so that there are no issues arising at General Electric. Also, in order to justify cost plus pricing, General electric is involved in cost allocations and in strengthening the cost of the procedure. They are also involved in decision making with regards to joint costs, re allocation of costs from one department to another department as need arises. GE makes sure that the allocated costs are fair, workable, and rational and according to the needs of what is required by all the departments. Allocating costs for the handling and managing of different activities have to be simplified in various ways, this simplification will ensure that the targets for the companies are achieved and that the targets achieved should give maximum profitability for the company. ...