Cost assignment

Cost assignment is the allocation of costs to the activities or objects that triggered the incurrence of the costs. The concept is heavily used in activity-based costing, where overhead costs are traced back to the actions causing the overhead to be incurred. The cost assignment is based on one or more cost drivers. For example, a university operates its own maintenance department; the cost of the department is assigned to the various other departments of the university based on their consumption of the department's maintenance services.

Cost assignment is also known as cost allocation.

Related Courses

Activity-Based Costing
Cost Accounting Fundamentals