allocated definition. Costs that have been divided up and assigned to periods, departments, products, etc. In cost accounting it is the assigning of common production costs to various production departments, product lines, individual products, activities.Click to see full answer. Thereof, what does allocation mean in accounting?An allocation is the process of shifting overhead costs to cost objects, using a rational basis of allotment. Allocations are most commonly used to assign costs to produced goods, which then appear in the financial statements of a business in either the cost of goods sold or the inventory asset.Also Know, how do you determine allocated cost? Therefore, 1,400 direct labor hours divided by 3,000 direct labor hours equals an allocation base of about 46 percent for Product A. Then 1,600 direct labor hours divided by 3,000 direct labor hours equals an allocation base of about 54 percent for Product B. Multiply the total cost by the allocation base. Consequently, what does it mean to allocate expenses? An expense allocation occurs when indirect costs are assigned to cost objects. Expense allocations are required by several accounting frameworks in order to report the full cost of inventory in the financial statements. Examples of cost objects are products, product lines, customers, sales regions, and subsidiaries.How do you allocate? Managerial Accounting For Dummies Add up total overhead. Compute the overhead allocation rate by dividing total overhead by the number of direct labor hours. Apply overhead by multiplying the overhead allocation rate by the number of direct labor hours needed to make each product.
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