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An Evaluation About The Importance Of Criteria Determining The Allocation Sequence In Step-Down Allocation Of Manufacturing Overhead Costs


  • Haluk BENGÜ

    () (University of Nigde, Department of Business Administration)

  • Ahmet Vecdi CAN

    () (University of Sakarya, Department of Business Administration)


In today’s business environment, one of the most popular methodologies used to allocate manufacturing overhead cost (MOC)s on products is “Step-down Allocation Method”. In this methodology, transferring of manufacturing overhead costs from supplementary cost centers to primary cost centers are made considering specific rules (Can, 2003:92). Also, after manufacturing overhead costs accrued in one of the supplementary cost centers are allocated to other cost centers, they can not again be allocated again (Üstün,1994:251). Consequently, sum of manufacturing overhead costs is gathered all together in primary cost centers to be allocated (Altuð, 2001:225). However, in these situations, from which of cost center to start allocation becomes an important subject. Here, the sequence of allocation plays two important roles and has two different effects. The first effect of sequence of allocation is on cost centers by means of cost planning and control. The second effect is on product parties by means of production planning and product costing&pricing.In this study, the sequence of allocation of manufacturing overhead costs is tried to be presented by a hypothetical application.

Suggested Citation

  • Haluk BENGÜ & Ahmet Vecdi CAN, 2010. "An Evaluation About The Importance Of Criteria Determining The Allocation Sequence In Step-Down Allocation Of Manufacturing Overhead Costs," Ege Academic Review, Ege University Faculty of Economics and Administrative Sciences, vol. 10(3), pages 751-771.
  • Handle: RePEc:ege:journl:v:10:y:2010:i:3:p:751-771

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    More about this item


    Manufacturing overhead costs; Step-down allocation methodology; Cost center.;

    JEL classification:

    • M41 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Accounting


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