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Accounting

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Cost Allocation is a method to identify and distribute indirect costs. Direct costs are costs assignable to a specific cost objective, whereas indirect costs are costs incurred for multiple cost objectives or not assignable to a specific cost objective without effort disproportionate to the benefit received.


The benefits received through Cost Allocation follow the law of diminishing returns, represented by an S-Curve. In short, there comes a point where increased effort no longer results in a notable increase in precision.

How can Cost Allocation be used in an organization's strategic goals? Explain

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