An Introduction to Cost Allocation
Lynch, Luann J.
Technical Note
An Introduction to Cost Allocation
C-2506 | Published March 24, 2025 | 14 pages. Technical Note
Collection: Darden School of Business
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This note discusses the concept of cost allocation, focusing specifically on allocating overhead, or indirect, costs to products and services. It presents a four-step process to designing cost-allocation systems and applies those steps to allocating overhead costs in both traditional and activity-based costing systems.
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