Cost Objects

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Definitions
Allocation Base
Allocation Base Cost Allocation Management Accounting Traditional Costing System Activity-Based Costing (ABC) Cost Objects Cost Drivers
In management accounting, an allocation base is used to distribute costs to cost objects. A crucial component of both traditional costing systems and Activity-Based Costing (ABC), the allocation base plays a significant role in accurate cost allocation.
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Definitions
Cause-and-Effect Allocation
Cause-and-Effect Allocation Cost Allocation Allocation Base Indirect Costs Cost Objects Traditional Costing Systems Activity-Based Costing
Cause-and-effect allocation is a cost allocation method where the allocation base is a significant determinant of the cost. This method ensures accurate assignment of indirect costs to cost objects.
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Definitions
Cost Allocation
Cost Allocation Cost Objects Indirect Costs Allocation Base Cost Driver Traditional Costing Systems Activity-Based Costing
Cost allocation is the process of assigning indirect costs to specific cost objects in a way that reflects resource consumption. This is crucial for making informed decisions, setting prices, and measuring profitability.
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Definitions
Cost Tracing
Cost Tracing Direct Costs Cost Objects Cost Management Financial Accounting Cost Allocation Expense Tracking
Cost tracing refers to the process of directly associating costs with specific cost objects such as projects, departments, or products, ensuring more accurate tracking of financial performance.
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