COST ALLOCATION Definition

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COST ALLOCATION is the assignment to each of several particular cost-centers of an equitable proportion of the costs of activities that serve all of them, i.e. shared cost pools.

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ALLOCATION is the act of distributing by allotting or apportioning; distribution according to a plan, e.g., allocating costs is the assignment of costs to departments or products over various time periods, products, operations, or investments. See ALLOCATE.

PURCHASE DISCOUNT is a reduction in the purchase price, allowed if payment is made within a specified period.

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