Cost allocation:

Question

Cost allocation:

Quizplus · Accepted Answer

Cost allocation is most often used for manufacturing overhead costs, which includes indirect costs such as rent, utilities, and depreciation. This is because these costs cannot be directly traced to a specific product or department and require an allocation method to distribute them to the appropriate cost objects. While direct material and labor costs may also be allocated, they are more easily traceable to specific products or departments. Non-manufacturing costs such as selling and administrative expenses may also be allocated, but are less common compared to manufacturing overhead costs.

Cost Allocation