Cost allocation includes identifying, aggregating and assigning costs to different organization items. Various departments are allocated funds depending on their relevance and importance to the organization in general (Audiopedia, 2017). For example, in this case, cost allocation is necessary to identify how much funds the school would allocate to the cafeteria, the library department and the career department.
In cost allocation, it is advisable first to identify the activity in which the costs are to be incurred. In this case, the costs are to be committed on the cafeteria, the library, and the career department. The benefits of each department are then assessed, and then an analysis of whether the costs are reasonable as per the benefits are later identified (Boyd, 2019). The costs should be made such that each object should be able to bear its allocated costs.
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A library is a core for all academic programs of an institution. An institutions name and quality of graduates is directly dependent on how it has equipped its library. Both Bachelors and Masters Students need a lot of resource materials, both general class work and for research purposes. They also need good space and calm environment for their studies. A well-equipped library will offer these benefits and hence build the name of the institution.
A cafeteria is also essential. It provides a place where students can get their quick meals at affordable prices to the students. Having a cafeteria within the school will save time since the students will not have to walk long distances for their meals.
A career placement center will provide the students with the necessary information they need to have to make well-informed career choices. However, most students who come for bachelors and masters studies have already settled on what they would like to pursue in life.
We realize that the library is the most important of the three areas that require financing. It has more benefits to the institution and the students alike. I would, therefore, recommend that the library is allocated most finances.
References
Audiopedia. (2017, June 4). What is COST ALLOCATION? What does COST ALLOCATION mean? COST ALLOCATION meaning & explanation [Video file]. Retrieved from https://www.youtube.com/watch?v=u70oLwsPKCo
Boyd, K. (2019). How to Justify Cost Allocation Decisions in Cost Accounting - dummies. Retrieved from https://www.dummies.com/business/accounting/how-to-justify-cost-allocation-decisions-in-cost-accounting/
