What is dual rate method?

Dual-Rate Method is a method of allocating costs in which two cost functions are used. Typically, the two functions are a fixed-cost function and a variable-cost function.

How is dual rate method calculated?

Quote from video: We'll use to do fixed costs. And then we'll use a different method to do the variable costs. And so that's why we call a dual rate we're actually going to do two different rates.

What is the difference between single and dual rate allocation?

With a single-rate allocation method, costs of support departments are allocated to user departments using asingle charge rate.In dual-rate allocation, fixed costs and variable costs are allocated using separate chargerates.

What is the single rate method?

The principle is incredibly simple: When you compute the single cost allocation rate, you multiply it by actual usage (activity) to apply the cost to the cost object.\nHere’s an example of figuring out the cost allocation rate.\nSay you manage an online tutoring business.

What are the three methods of cost allocation?


There are three methods commonly used to allocate support costs: (1) the direct method; (2) the sequential (or step) method; and (3) the reciprocal method.

What is step down method?

Unlike direct method, the step method (also known as step down method) allocates the cost of a service department to other service departments as well as to operating departments. The cost allocation under step method is a sequential process.

How do you calculate allocation rate?

Calculate Overhead Allocation Rate

To allocate the overhead costs, you first need to calculate the overhead allocation rate. This is done by dividing total overhead by the number of direct labor hours. This means for every hour needed to make a product, you need to allocate $3.33 worth of overhead to that product.

What are the advantages of using the single rate method?

A) It is the most widely used method in practice. B) It is less costly to implement. C) It avoids the expensive analysis for categorizing costs as either fixed or variable. D) It allocates fixed cost as per the budgeted usage that helps in short and long-run planning.

Why might a manager prefer that budgeted rather than actual cost allocation rates be used for costs being allocated to his or her department from another department?

Budgeted cost rates motivate the manager of the support department to improve efficiency because the support department bears the risk of any unfavorable cost variances.

What is theoretically the most defensible method for allocating service division costs?

The reciprocal method is theoretically the most defensible method because it fully recognizes the mutual services provided among all departments, irrespective of whether those departments are operating or support departments. Distinguish between two methods of allocating common costs.

What is dual rate cost allocation?

Dual-Rate Method is a method of allocating costs in which two cost functions are used. Typically, the two functions are a fixed-cost function and a variable-cost function.

What is reciprocal method of cost allocation?

What is the Reciprocal Method? The reciprocal method uses simultaneous equations to allocate the costs incurred by service departments to other departments; allocations are also made between the service departments. This method results in an accurate distribution of costs.

When managers use dual rate allocation they separate which kinds of costs into different pools?

Terms in this set (38)

Dual rate costs are grouped into separate variable and fixed-cost pools with each pool using a different cost allocation base and rate.

What is the sequential method?

The sequential method is used to allocate the cost of service departments to other departments within an organization. Under this approach, the cost of each service department is allocated one department at a time.

What is FIFO system of pricing issue?

2. First-In First-Out (FIFO) Method: CIMA defines FIFO as “a method of pricing the issue of material using, the purchase price of the oldest unit in the stock”. Under this method materials are issued out of stock in the order in which they were first received into stock.

What is the High Low method?

In cost accounting, the high-low method is a way of attempting to separate out fixed and variable costs given a limited amount of data. The high-low method involves taking the highest level of activity and the lowest level of activity and comparing the total costs at each level.

Which of the following is an advantage of using the dual rate method of allocating support department costs?

Which of the following is an advantage of using dual-rate method of allocating support-department costs? The dual-rate method guides department managers to make decisions that benefit both the organization as a whole and each department.

What are the limitations of ABC costing?

A primary disadvantage of ABC is that it is not possible to divide some overhead costs such as the chief executive’s salary on a per-product usage basis. (1) ABC will be of limited benefit if the overhead costs are primarily volume related or if the overhead is a small proportion of the overall cost.

What are the advantages and disadvantages of using an ABC cost system?

Advantages and Demerits of Activity Based Costing (ABC)

  • Accurate Product Cost: …
  • Information about Cost Behaviour: …
  • Tracing of Activities for the Cost Object: …
  • Tracing of Overhead Costs: …
  • Better Decision Making: …
  • Cost Management: …
  • Use of Excess Capacity and Cost Reduction: …
  • Benefit to Service Industry:

How is YP dual rate calculated?

Quote from video: We will use yp single rate yp inperpetuity yp reversion to perpetuity. Okay so this is for freehold property. However this time we gonna learn on this whole property calculation of interest.

What are dual rates in RC?

Dual Rates consist of Low Rates and High Rates. Low Rates make the aircraft less responsive (i.e. easier to control), and High Rates make the aircraft more responsive (i.e. harder to control). Dual Rates are typically controlled by a toggle switch on an R/C transmitter.

What is d R RC car?

This means that you can adjust the amount of steering you use left and right. Turn it down for less total steering and up for more total steering. Affects both sides at same time, hence the word dual.

How much expo should a beginner get?

Expo works in concert with rate settings and is another piece of the puzzle in getting your radio controls exactly the way you want them. Sneaking up on how much expo to use is a good way to do it if you’ve never tried it before. Entering a 10% value would be a good start.