Fundamentals of Cost Accounting 3rd Edition by William N. Lanen, Shannon W. Anderson, Michael Maher

Exercise 42

You and two friends drive your car to Texas for spring break. A third friend asks if you can drop her off in Oklahoma. How would you allocate the cost of the trip among the four of you?

Step 1 of 2

Allocation of cost: -

If an expenditure can be allocated are assigned to a cost center or cost object in an economically feasible way than it become a direct expenditure otherwise it is term as indirect expenditure.