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a factor that determines the cost of an activity. Cost drivers are analyzed as part of activity based costing and can be used in continuous improvement programs. They are usually assessed together as multiple drivers rather than singly. There are two main types of cost driver: the first is a resource driver, which refers to the contribution of the quantity of resources used to the cost of an activity; the second is an activity driver, which refers to the costs incurred by the activities required to complete a particular task or project.
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What is the Formula for cost allocation rate?
allocation rate=cost pool amount/ cost driver volume
Is the selection of an appropriate cost allocation base more important for a single-stage cost allocation system than it is for a two-stage cost allocation system?
no
What is cost objectives?
Cost objectives determines the cost allocation. It determines the product, service or department that will receive the allocation.
Is cost allocation base a cost driver?
Yes, it is. When used for allocating costs, a cost driver is often called a cost-allocation base
What is arbitrary allocation in cost accounting?
allocate cost arbitrarily
Importance of cost allocation?
Cost allocation allows a company to determine the amount each item produced will cost. An effective cost allocation will be able to track down the shared costs of production not only to the divisions but also to the products and customers that use those costs.
What is the difference between overhead allocation with overhead apportionment?
The following are the differences between allocation and apportionment. 1. Allocation costs are directly allocated to cost centre. Overhead which cannot be directly allocated are apportioned on some suitable basis. 2. Allocation allots whole amount of cost to cost centre or cost unit where as apportionment allots part of cost to cost centre or cost unit. 3. No basis required for allocation. Apportionment is made on the basis of area, assets value, number of workers etc.
What is cost absorption in cost accounting?
Simply: allocation of cost to a cost centrehttp://www.answers.com/topic/cost-absorption:Allocation of cost to a product, process, or department using a rational allocation basis. For example, rent expense can be allocated to a department based on square footage.
What is the process of assigning indirect costs?
Cost allocation...
Why is human resources important to the development of industry?
How the opportunity cost can be applied to the production process for the allocation of resources. How the opportunity cost can be applied to the production process for the allocation of resources.
What criteria are important in determining the choice of an allocation base?
When choosing an allocation base, it is important to consider factors such as the base's ability to accurately reflect the relationship between the cost being allocated and the allocation base, ease of understanding and application, availability of data for the allocation base, and the appropriateness of the base for the specific cost being allocated. Ultimately, the allocation base should result in a fair and reasonable distribution of costs among the cost objects.
The tracing or reassigning of costs to one or more cost objectives is referred to as?
cost allocation
