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Shelter Partnership

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Submitted By christelledee
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EXECUTIVE SUMMARY

SHELTER PARTNERSHIP is a non-profit corporation that provides services for homeless people. The company collects donated goods and distributes them to homeless shelters. Among its services are providing technical, program development and public policy support, as well as direct material assistance to more than 200 homeless shelter and social agencies.
Ruth Schwarts, executive director of the Shelter Partnership, Inc. handles the company’s cost accounting with confidence. She had been estimating the costs of the Partnership entities by making simple cost assignment and allocations; Ruth believed that her figures were reasonable and accurate. However, some concerns have developed and she wondered whether her costing procedures needed improvement. The Partnership’s Shelter Resource Bank solicited large scale donations of new, excess inventory form manufacturers, retailers, and other business.
The company used a single stage cost accounting system that either assigned or allocated costs to Resource Bank or left them in a category that could be called “All Other Activities”. The financial records of the Partnership did not assign revenues to the various operating entities; they also used three broad expense categories: Personnel Expense, Other Expenses, and Independent Expenses.
Ruth felt that she might be under costing the Shelter Resource Bank and that this understatement may cause a negative impact on her fund raising effort. But she also believed that showing higher expenses for the Resource Bank might gain more sympathy from donors.

STATEMENT OF THE PROBLEM
How can Shelter Partnership, Inc. improve their cost allocation and guarantee a proper costing system?

OBJECTIVE OF THE STUDY
Taking this case on Ruth Schwartz’ point of view, this analysis should be able to meet the following objectives: * To determine the problems on the

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