The Direct Method for Allocating the Costs of Multiple Support Departments

This video shows how to use the Direct Method to allocate the costs of multiple support departments to operating divisions when the support departments provide services to each other. When using the Direct Method, you simply ignore the services that the support departments provide to one another. The Direct Method is popular because it is the easiest method to apply but it ignores the services that support departments provide to one another. The Step Down Method and Reciprocal Method address this issue by allocating support costs provided between support departments.
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[@deejaaay7600]

It's incredible how complex college accounting books make concepts like this. It's almost like it's desirable to make things harder than it should.

[@user-vr7xm1bv5b]

I could not agree more

[@cjsams2015]

I really enjoyed watching this video. My professor really made this complicated and didnt teach the material the way it is taught on here. It is much easier watching it on here. thank you.

[@xygenphantom]

I see you posted 8 videos today. Great timing! Just in time for my cost accounting class. Followed your videos for my last financial reporting class and got an A. You do an excellent work at explaining in a simple way. Thank you!

[@Edspira]

+xygenphantom No problem my friend! Congratulations on acing your class!!

[@petrafekete3357]

I admire these videos, they are my greatest helpers in hard times.

[@mr.keyboardwarrior8802]

a like and subscription is not enough to appreciate just how much you have saved my semester with your videos!!!

[@notreallyash]

thank you so much. i hope you'll see this that even after 4 years, you are helping students around the world who are struggling with their professors. even though we are experiencing a pandemic, my university provided an online classroom that made teaching even worse, so thank you so much.

[@tonpapas]

you've been a huge help to me in respects to my exam preparation, thank you so much for your service

[@Edspira]

I'm so happy to hear that! Thank you for the encouragement!

[@jasmijnbrandjes3051]

I did not get the explanation in the slides and in the book of all these methods. Now, It all seems easy. Thank you!

[@Edspira]

Thanks Jasmijn!

[@samphillips1865]

This video is an absolute lifesaver. Thank you!

[@pahalsatvilkar7830]

You have taught in very nicely & in easiest way

[@lopezmark2007]

Thank you so much! These are very helpful for my summer cost accounting!

[@Edspira]

No problem! Summer cost accounting doesn't sound like fun...

[@haneaordonez3274]

THANKS! Awesome video, it is clearly explained! It was so helpful

[@feifeiyu4135]

my best study partner.

[@MyFinancialFocus]

Interesting to think about how these different managerial accounting methods are simply for internal use.

[@kazuwaaa4154]

You gave me hope that I can pass this course sir. Thank you so much

[@Edspira]

You can do it! Good luck!

[@zoealex1620]

Thanks very much for this, hoping to pass my exam with your help :)

[@Edspira]

Good luck on the exam!

[@zoealex1620]

Thank you, I passed! :)

[@sanayargatti2211]

Ur videos are helping me with cma usa as well thanks 😊

[@haneaordonez3274]

Thanks for help! Excellent videos!

[@MuhammetKenan]

Good content as always. Thank you!

[@Edspira]

No problem!

[@None-yd7so]

Great video using direct method!

[@TheTrueGamble]

Thanks for helping me study for my CPA exam! I'm using Roger CPA, but he didn't have an example of direct method :( only the step method.

[@duongchi5516]

can you please do a topic on Just in time production and Backflush Costing please?

[@prettyyella32]

Life saver Thank you 🙏

[@aboodkiwan4817]

I have a question, why we are allocating the cost to the supporting department as these are periodic costs G&A S&M expenses, not MOH.

[@avarussurava9488]

thanks !!!

[@hashimrahman2143]

Purchase of hock material is mandatory????

[@santiagoacostabetancourt2447]

I have been seeing your videos and they are awesome. I have one question are this support division costs part of COGS or SG&A costs. I understand that this costs are periodical cost and must go in the SG&A section. I am confused. Why we allocate them in each division?

[@sango3128]

If I wasn't being taught this at my university and someone came up to me and explained that this to me I would think it would be 100% illegal.

[@tingpangchong437]

Hi I have a question that is related to F&B marketing industry. If suppose the company operates 4 marketing programs with each programs generate card sales. How do you allocate the monthly rental cost? Do you divide the rental cost by no. of card sales generated to get cost per sales or by no. of active marketing programs to get cost per program?

[@Edspira]

I realize this isn't specific, but ultimately it is up to management to decide the best way to allocate costs. Dividing by the number of marketing programs is easiest, but maybe not the most accurate. Management needs to determine the best way depending on the business. There are no hard and fast rules. For example, maybe the building's rent cost would be best allocated based on the square footage that each marketing team uses in the building or the number of employees working on each project. The better you can trace costs to a specific project/department, then the better information you will have for decision making.

[@numberone7447]

I mean I can't see the numbers clearly

[@tsatsiletsoara9737]

nice video 👌

[@Edspira]

Thank you!

[@micatala5432]

what app did you use for digital writing?

[@Edspira]

I use a Wacom Bamboo tablet and screen record with Camtasia

[@hant2661]

Who get step down ending?

[@numberone7447]

It's not clear.

[@hebaalghareeb703]

It's very late but, what don't you understand? 😅

[@ayooooitsShan]

Can someone please tell me why the fuck accounting is so complicated (much more than other business majors), yet they get paid on the lower end of all business majors?

[@Alloya3]

Kossom