Allocated Costs are costs that have been applied to a good or activity through some kind of organised method.
The process of allocating expenses to financing sources who profit from the products or services acquired is known as cost allocating.
Finding, gathering, and allocating costs to cost objects like departments, goods, programmes, or a corporate branch is the process of cost allocation. To spread costs across departments or inventory items for financial reporting needs, cost allocation is employed.
Cost allocation is also used to determine profitability at the departmental or subsidiary level, which is then used to determine bonuses or how much money may be allocated for extra activities. In order to calculate transfer prices between subsidiaries, cost allocations can also be used.
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