COST APPORTIONMENT Meaning and
Definition
-
Cost apportionment refers to the process of allocating or dividing costs among various departments, projects, or entities within an organization. It involves determining the portion of overall costs that should be attributed to each segment or unit based on certain criteria or allocation keys.
The objective of cost apportionment is to fairly distribute the expenses incurred by an organization in a manner that accurately reflects the contribution or usage of resources by different departments or entities. This enables proper cost management, monitoring, and decision-making at various levels within the organization.
The allocation keys or criteria used in cost apportionment may vary depending on the nature of costs and the organization's structure. Common allocation methods include direct allocation, where costs are directly assigned to a specific cost center, and indirect allocation, where costs are allocated to cost centers based on pre-determined percentages or ratios.
Cost apportionment is a crucial process in managerial accounting as it helps in evaluating the performance and profitability of different segments, facilitating cost control and budgeting, and determining the true cost of products, services, or activities. It also assists in identifying areas of improvement or inefficiencies within the organization.
Overall, cost apportionment is an essential tool for organizations to effectively allocate costs, enhance cost transparency, and support informed decision-making processes.
Common Misspellings for COST APPORTIONMENT
- xost apportionment
- vost apportionment
- fost apportionment
- dost apportionment
- cist apportionment
- ckst apportionment
- clst apportionment
- cpst apportionment
- c0st apportionment
- c9st apportionment
- coat apportionment
- cozt apportionment
- coxt apportionment
- codt apportionment
- coet apportionment
- cowt apportionment
- cosr apportionment
- cosf apportionment
- cosg apportionment
- cosy apportionment
Etymology of COST APPORTIONMENT
The word "cost apportionment" is a technical term used in the field of accounting and finance. It consists of two parts:
1. Cost: The word "cost" is derived from the Latin word "custus" meaning "expense" or "price". It was originally used in the context of business expenses and later extended to various other domains.
2. Apportionment: The word "apportionment" is derived from the verb "apportion", which comes from the Old French word "aportioner", meaning "to divide into portions". It refers to the act of assigning or distributing something proportionally.
When combined, "cost apportionment" refers to the process of allocating or dividing costs among different entities, departments, or projects based on certain predetermined criteria.
