ECONOMICS

Detailed explanation-1: -Process of tracing direct costs and allocation of indirect costs is known as cost assignment. Cost assignment is the allocation of costs to the activities or objects that triggered the incurrence of the costs.

Detailed explanation-2: -The procedures by which direct or indirect costs are charged to or made the responsibility of particular cost centres, and ultimately charged to the products manufactured or services provided by the organization.

Detailed explanation-3: -Process of assigning indirect costs to any specific cost object is known as cost allocation. Cost allocation is the process of identifying, aggregating, and assigning costs to cost objects. A cost object is any activity or item for which you want to separately measure costs.

Detailed explanation-4: -Direct costs are costs that can be attributed to a specific product or service, and they do not need to be allocated to the specific cost object. Indirect costs are costs that cannot be easily associated with a specific product or activity because they are involved in multiple activities.

Detailed explanation-5: -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.