Allocation means that an indirect cost is assigned to a cost object using a reasonable and convenient method.

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Allocation is a way of assigning indirect costs to a cost object in a reasonable and convenient manner. It involves using an allocation base to distribute the indirect cost to the cost object, such as a department, product, or service. The allocation method should be based on a systematic and rational approach that reflects the causal relationship between the cost and the cost object.

Allocation Means That an Indirect Cost Is Assigned to a Cost