Cost allocation is
A)the process of tracking both direct and indirect costs associated to a cost object.
B)the process of determining the actual cost of the cost object.
C)the assignment of indirect costs to the chosen cost object.
D)a function of cost tracing.
E)the assignment of direct costs to the chosen cost object.

Question

Quizplus · Accepted Answer

Cost allocation specifically refers to the assignment of indirect costs to a cost object. Direct costs are typically traced to the cost object, while indirect costs must be allocated based on a predetermined method, such as the use of cost drivers. Options A, B, D, and E are related to cost tracking and determination, but do not specifically address the allocation of indirect costs.

Cost Allocation Is