Reallocation of Direct Production Management Departments Cost
6. Production Managers departments:
Administrative Departments include all general administrative units, but not administrators for production departments, such as supervisory units. They may include the Production Manager’s Department.
Direct Production Departments Managerial operating cost must be reallocated to direct production departments controlled by that manager. The Reallocated amount should be budgeted ahead for 1 year, and a portion reallocated by monthly established amount.
Beginning with our Cost Elements, the expired portion of Expenditures, we must allocate Indirect Costs to the various departments within a company.
At minimum four basic groups of departmental accounts must be constructed for Internal Accounting:
- Administrative and Sales Departments
- Direct Production Departments
- Indirect Production Departments
- Service Departments.
It is a challenge to adequately balance all departments of the company. After the first year’s implementation of Departmental Accounts, we will likely recognize changes and fine-tuning to be made to this allocation procedure. It will become a living, dynamic structure.