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What is the difference between cost allocation and cost apportionment?

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What is the difference between cost allocation and cost apportionment?
posted Jun 13, 2017 by Sagar Sharma

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Differences b/w Cost allocation and apportionment

Allocation:
• Allocation means the allotment of whole items of cost to cost centres or cost units.
• It deals with the whole items of cost.
• Cost is directly allocated to any cost centre or cost units.
• Cost is allocated when the cost centre uses whole of the benefits of the expenses.

Apportionment:
• Apportionment means allotment of proportion of items of cost to cost centres or cost units.
• It deals with only proportion of items of cost.
• It needs a suitable basis for subdivision of cost by cost centres or cost units. Thus it is indirect process of allotment.
• Cost is apportioned when cost centres use only a proportion of the benefits of the whole expenses.

answer Jun 13, 2017 by Naveen Kumar
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