Lecture notes were adapted and posted on-line with permission of publisher and are only for use by students enrolled in ACCT 8210. Common cost is a cost shared by two or more cost objects. Accounting, building maintenance, supervisors.
Cost allocation is the assignment of indirect, common, or joint costs to cost objects.
Allocation base is the measure of activity used to allocate costs. Defining the cost objects . Decide what departments, products, or processes to cost. Accumulating the common costs to be assigned to the cost objects. Allocating the accumulated costs to cost objects using an allocation base.