Principles of Cost Accounting
Principles of Cost Accounting
17th Edition
ISBN: 9781305087408
Author: Edward J. Vanderbeck, Maria R. Mitchell
Publisher: Cengage Learning
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Cost allocation bases are ideally based on a cause and effect basis. That is not always easy when allocating fixed costs. Why might this be so?

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Step 1: Define the term Cost allocation:

Cost allocation is the process of assigning or distributing a company's indirect costs to various cost objects or cost centers within the organization. The goal of cost allocation is to attribute shared or common costs to specific activities, products, projects, or departments in a systematic and equitable manner.

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