ECONOMICS

Detailed explanation-1: -What Is Cost Allocation? Cost allocation refers to a process of accounting and recording the full costs of a government service by including its indirect costs or “overhead” in addition to its direct costs.

Detailed explanation-2: -An allocation base is the basis on which Cost accounting allocates overhead costs. An allocation base can be a quantity, such as machine hours that are used, kilowatt hours (kWh) that are consumed, or square footage that is occupied.

Detailed explanation-3: -The most widely used allocation bases in manufacturing are direct labor hours, machine hours, direct labor costs, and units of the product.

Detailed explanation-4: -There are three main categories of standard costs, basic standard costs, ideal standard costs and currently attainable standard costs.