Lesson 1, Topic 1
In Progress

3.1. Accounts allocation includes but is not limited to geographical locations, alphabetical breakdowns, affordability, language.

ryanrori January 20, 2021

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What is cost allocation?

Cost allocation is the assigning of a common cost to several cost objects. For example, a  company might allocate or assign the cost of an expensive computer system to the three main areas of the company that use the system. A company with only one electric meter might allocate the electricity bill to several departments in the company.

Allocation implies that the assigning of the cost is somewhat arbitrary. Some people describe the allocation as the spreading of cost, because of the arbitrary nature of the allocation. Efforts have been made over the years to improve the bases for allocation. In manufacturing, the overhead allocations have moved from plant-wide rates to departmental rates, from direct labor hours to machine hours to activity based costing. The goal is to allocate or assign the costs based on the root causes of the common costs instead of merely spreading the costs.

Record tools and systems include but are not limited to manual and electronic systems.

What is a recordkeeping system?

A “recordkeeping system” is a manual or automated system that collects, organizes, and categorizes records, facilitating their preservation, retrieval, use, and disposition.

A recordkeeping system has four components:

  • Records – information resources, in any format, that are:
    • created in the course of business,
    • received for action, or
    • needed to document Agency activities.

Basic Requirements of an Electronic Recordkeeping System 

These are the basic and federal requirements for recordkeeping systems that manage records on electronic media. Collectively these requirements cover:

  • life cycle management
  • metadata
  • retrieval
  • integrity
  • security
  • backup
  • migration
  • permanent records
  • procedures