Allocation of Cost – TL project


April 25th, 2007 by admin admin

I used to allocate cost based on revenue and number of units. This time round, I learnt something new. I can also allocate cost based on Cost of Goods Sold, COGS in short. This may be a better measure for allocation as the figures are controlled internally. The company or the department is not penalised just because they are selling the goods at a higher price. Having said that, the yard stick for cost allocation remained unchange. It has to be based on the acitivity the cost has a close relation to.

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