Service departments
In this lesson, you'll learn what service departments are and why their costs matter to your business pricing and profitability. Service departments—like IT, maintenance, or canteen facilities—don't produce goods for sale but provide essential internal support.
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In this lesson
- 0:00 Service departments and cost centres explained
- 0:23 Examples of service departments in practice
- 0:50 Methods for charging service department costs
- 1:30 Absorption costing and reapportionment approach
- 1:54 Why service costs matter for pricing and profit
About this lesson
You'll discover how to handle their costs through different charging methods, including absorption costing reapportionment, actual cost allocation, and variable cost approaches. Understanding how to recover service department costs ensures your selling prices and budgets accurately reflect the true cost of doing business, a key concept in Performance Management and management accounting across CIMA and ACCA qualifications.
Duration: 2m
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