Allocation-Based Systems
Allocation-based systems are those accounting systems that attempt to allocate costs to product or service centers using either traditional or modern methods of cost accounting. Traditional cost accounting systems include job costing, process costing, and standard costing. Examples of modern cost accounting systems would be activity-based costing (ABC) and process-based costing (PBC).
Under a job-costing system, direct costs like raw material and direct labor are charged to specific jobs based on usage of materials and labor. People working on specific jobs are made to fill in job cards, and the raw material drawn for a particular job is charged on the same card. An example of this process would be to take a look at ...
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