Allocation of Cost

 

 

Allocation of Cost

It refers to assigning resources/costs to a product, service, division, department, etc. on an arbitrary basis. 

Costs that have already been assigned to periods, products, service, division, departments, etc. For example, depreciation is the asset’s cost that is assigned to each of the years for which the asset is used by the company. In cost accounting it refers to production overhead costs assigned to various production divisions, production departments, product processes, individual products, and other activities.

 

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