what is cost allocation
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Cost allocation Cost allocation is the process of identifying, aggregating, and assigning costs to cost objects. A cost object is any activity or item for which you want to separately measure costs.Examples of cost objects are a product, a research project, a customer, a sales region, and a department.Cost allocation is used for financial reporting purposes, to spread costs among departments or inventory items.Cost allocation is also used in the calculation of profitability at the department or subsidiary level, which in turn may be used as the basis for bonuses or the funding of additional activities.Cost allocations can also be used in the derivation of transfer prices between subsidiaries. Example of Cost Allocation.xamples of cost objects are a product, a research project, a customer, a sales region, and a department. Cost allocation is used for financial reporting purposes, to spread costs among departments or inventory items.
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- Definition: An allocation is the process of shifting overhead costs to cost objects, using a rational basis of allotment. Allocations are most commonly used to assign costs to produced goods, which then appear in the financial statements of a business in either the cost of goods sold or the inventory asset.
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Allowable, Allocable, and Reasonable Costs The process of assigning a cost, or a group of costs, to one or more cost objective(s), in reasonable proportion to the benefit provided or other equitable relationship. The process may entail assigning a cost(s) directly to a final cost objective or through one or more intermediate cost objectives.
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- Indirect activity allocation is a useful method for allocating activity costs from sender cost centers to receiver cost centers based on activity reported in the receiver cost centers.hen it is not easy to determine the activity quantity to post in the sender cost center, the indirect activity allocation cycle is used to determine both the sender activity quantities and the allocated quantities based solely on receiver activity posted in the receiver cost center.
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- It is part of resource management. In project management, resource allocation is the scheduling of activities and the resources required by those activities while taking into consideration both the resource availability and the project time.
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- Allocation. Definition: An allocation is the process of shifting overhead costs to cost objects, using a rational basis of allotment. Allocations are most commonly used to assign costs to produced goods, which then appear in the financial statements of a business in either the cost of goods sold or the inventory asset.llocation. Definition: An allocation is the process of shifting overhead costs to cost objects, using a rational basis of allotment. Allocations are most commonly used to assign costs to produced goods, which then appear in the financial statements of a business in either the cost of goods sold or the inventory asset.
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allocated definition allocated. Costs that have been divided up and assigned to periods, departments, products, etc. In depreciation it is the asset's cost that is assigned to each of the years that the asset is in use. In cost accounting it is the assigning of common production costs to various production departments, product lines, individual products, activities.
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Consolidation: Ensuring that allocable cost amount is allocated to intra-group assets Purpose. 1  The cost setting rules will be amended to ensure that an allocable cost amount (ACA) is allocated to a retained cost base asset that is an intra-group asset. 2  This is because these assets cease to be recognised for tax purposes within a consolidated group. A joining entity’s intra-group liability (which is an asset of another group entity) is added at step 2 of the ACA calculation. 2  The amount of the liability is the corresponding cost base or reduced cost base of the associated asset that is held by the other group entity.
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Resource allocation Resource allocation. In economics, resource allocation is the assignment of available resources to various uses. In the context of an entire economy, resources can be allocated by various means, such as markets or central planning.
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allocation 1.Finance: An authorization to incur expense or obligation up to a specified amount, for a specific purpose, and within a specific period. 2.The amount so authorized. The budget and finance committee increased the allocation for member education this year after several industry changes required new skill development. Allocation of fees were being authorized by the board of directors who set up specific rules about the purpose that those fees served in the grand scheme of things.
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- Using SailRite Company as an example, assume annual overhead costs are estimated to be $8,000,000 and direct labor hours are used for the plantwide allocation base. Management estimates that a total of 250,000 direct labor hours are worked annually.nswer: The choice of an allocation method depends on how managers decide to group overhead costs and the desired accuracy of product cost information. Groups of overhead costs are called cost poolsA collection of overhead costs, typically organized by department or activity. .
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Projects:Cost Allocation/Specifications 1 Cost allocation: the kind of accounting that allows assigning and allocating revenues and expenses to the different cost centers of the company. 2  Cost center: it is a part of the organization (usually identified with a functional area) that we use to allocate revenues and expenses. Client 2  : Cost allocation: the kind of accounting that allows assigning and allocating revenues and expenses to the different cost centers of the company. 3  Cost center: it is a part of the organization (usually identified with a functional area) that we use to allocate revenues and expenses.
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What Is Asset Allocation? What Is Asset Allocation? Asset allocation is a strategy of investment which makes an effort to balance risk against reward by adjusting the percentage of capital that is devoted to each asset that constitutes an investment portfolio. Asset allocation is a key component of developing an investment strategy.
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So You Want to Know About Indirect Costs Therefore, cost allocation plans or indirect cost rates are used to distribute those costs to benefiting revenue sources. Looking at it another way, indirect costs are those costs that are not classified as direct.
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Resource allocation In project management, resource allocation or resource management is the scheduling of activities and the resources required by those activities while taking into consideration both the resource availability and the project time.
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Resource allocation In strategic planning, resource allocation is a plan for using available resources, for example human resources, especially in the near term, to achieve goals for the future.It is the process of allocating scarce resources among the various projects or business units.esource allocation is the assignment of available resources to various uses.
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- Cost allocation and cost apportionment are methods for attributing cost to particular cost objects (Cost object is a term referring simply to any item associated with a cost figure of its own).The assignment of cost figures to specific cost objects is a central task in budgeting, planning, and financial reporting.ost allocation and cost apportionment are methods for attributing cost to particular cost objects (Cost object is a term referring simply to any item associated with a cost figure of its own).
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What is 'Asset Allocation' What is 'Asset Allocation' Asset allocation is an investment strategy that aims to balance risk and reward by apportioning a portfolio's assets according to an individual's goals, risk tolerance and investment horizon. The three main asset classes - equities, fixed-income, and cash and equivalents - have different levels of risk and return, so each will behave differently over time. BREAKING DOWN 'Asset Allocation' There is no simple formula that can find the right asset allocation for every individual.
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- Wiktionary(0.00 / 0 votes)Rate this definition: allocation(Noun) The process or procedure for allocating things, especially money or other resources. The allocation of new permits is on a first-come, first-served basis.
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- 1 Cost allocation: the kind of accounting that allows assigning and allocating revenues and expenses to the different cost centers of the company. 2  Cost center: it is a part of the organization (usually identified with a functional area) that we use to allocate revenues and expenses.
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Cost allocation 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).n 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.
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- The allocation base is the link that is used to attach overhead costs to the cost object. In a manufacturing setting, the simplest allocation base is the number of units produced. For example, if the factory makes 15,000 units, the accounting system can simply spread the overhead costs evenly over all 15,000 units.he allocation base is the link that is used to attach overhead costs to the cost object. In a manufacturing setting, the simplest allocation base is the number of units produced. For example, if the factory makes 15,000 units, the accounting system can simply spread the overhead costs evenly over all 15,000 units.
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Asset allocation Investment portfolio with a diverse asset allocation. Asset allocation is the implementation of an investment strategy that attempts to balance risk versus reward by adjusting the percentage of each asset in an investment portfolio according to the investor's risk tolerance, goals and investment time frame. 1 Description.
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- Cost allocation is important because it the process through which costs incurred in producing a certain product or rendering a certain service is calculated. If costs are not accurately calculated, a business might never know which products are making money and which ones are losing money.ost allocation base. Cost allocation base is the variable that is used for allocating/assigning costs in different cost pools to different cost objects. A good cost allocation base is something which is an appropriate cost driver for a particular cost pool.
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What is 'Asset Allocation' Asset Allocation. Loading the player... What is 'Asset Allocation'. Asset allocation is an investment strategy that aims to balance risk and reward by apportioning a portfolio's assets according to an individual's goals, risk tolerance and investment horizon.
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Purchase price allocation Purchase price allocation (PPA) is an application of goodwill accounting whereby one company (the acquirer), when purchasing a second company (the target), allocates the purchase price into various assets and liabilities acquired from the transaction.urchase price allocation (PPA) is an application of goodwill accounting whereby one company (the acquirer), when purchasing a second company (the target), allocates the purchase price into various assets and liabilities acquired from the transaction.