Cost allocation is a process of spreading the cost to the different areas of an organization. The cost allocation can be associated with and can be based on various factors. Mainly costs are of two types; direct costs and indirect costs. Direct costs are material and labor that are easily traceable. Other costs are indirect costs that include indirect material, indirect labor, and overheads.
Only overhead costs can be allocated on an appropriate basis. For example, in a garments factory, the stitching unit is mostly labor-intensive so it would be suitable to allocate the overhead costs based on the labor hours. In the cutting unit, the suitable allocation will be on machine hours as the cutting is done by machines.
Woodbury Hospital has three service departments and three operating departments. Estimated
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Match each of the following cost pools with the most appropriate cost
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The postal service of St. Vincent, an island in the
