What is cost allocation?
A)A function of cost tracing
B)The process of determining the actual cost of the cost object
C)The assignment of indirect costs to the chosen cost object
D)The process of tracking both direct and indirect costs associated with a cost object

Question

Quizplus · Accepted Answer

Cost allocation refers to the assignment of indirect costs to the chosen cost object, such as a product or a department. It is a crucial step in determining the true cost of the cost object, and is typically based on some allocation method or cost driver. A cost trace, on the other hand, is the process of identifying and collecting the actual costs that are directly attributable to a cost object, while cost tracking involves monitoring the costs of a project or activity over time.

What Is Cost Allocation