Stage 1 allocation definition

What is a Stage 1 Allocation?

A stage 1 allocation is the distribution of costs to activities. The concept is used in activity-based costing; it is a preliminary step in the allocation of overhead. A stage 2 allocation involves distributing the costs of activities to cost objects. Using two stages of allocations is intended to result in more accurate overhead allocations. The resulting information can give insights into how overhead costs are being consumed by various activities.

Related AccountingTools Courses

Activity-Based Costing

Cost Accounting Fundamentals