Lesson plan
Cost allocation
Cost allocation is a process of providing relief to shared service organization's cost centers that provide a product or service. In turn, the associated expense is assigned to internal clients' cost centers that consume the products and services. For example, the CIO may provide all IT services within the company and assign the costs back to the business units that consume each offering. The core components of a cost allocation system consist of a way to track which organizations provides a product and/or service, the organizations that consume the products and/or services, and a list of portfolio offerings (e.g. service catalog). Depending on the operating structure within a company, the cost allocation data may generate an internal invoice or feed an ERP system's chargeback module. Accessing the data via an invoice or chargeback module are the typical methods that drive personnel behavior. In return, the consumption data becomes a great source of quantitative information to make better business decisions. Today’s organizations face growing pressure to control costs and enable responsible financial management of resources. In this environment, an organization is expected to provide services cost-effectively and deliver business value while operating under tight budgetary constraints.…
Article summary
Cost allocation is a process of providing relief to shared service organization's cost centers that provide a product or service. In turn, the associated expense is assigned to internal clients' cost centers that consume the products and services. For example, the CIO may provide all IT services within the company and assign the costs back to the business units that consume each offering. The core components of a cost allocation system consist of a way to track which organizations provides a product and/or service, the organizations that consume the products and/or services, and a list of portfolio offerings (e.g. service catalog). Depending on the operating structure within a company, the cost allocation data may generate an internal invoice or feed an ERP system's chargeback module. Accessing the data via an invoice or chargeback module are the typical methods that drive personnel behavior. In return, the consumption data becomes a great source of quantitative information to make better business decisions. Today’s organizations face growing pressure to control costs and enable responsible financial management of resources. In this environment, an organization is expected to provide services cost-effectively and deliver business value while operating under tight budgetary constraints.…
Key claims
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Discussion questions
- Summarise the article in your own words. Which single claim would you verify first, and why?
- Which claim in this article is most likely to be revised as the sources update? How would you check its current status?
- If two sources disagreed about one of these facts, what would you need in order to trust one over the other?
Bibliography
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Key claims and bibliography are generated from the same tracked claims and sources as the article page.