Cost Allocation is a method to identify and distribute indirect costs. Direct costs are costs assignable to a specific cost objective, whereas indirect costs are costs incurred for multiple cost objectives or not assignable to a specific cost objective without effort disproportionate to the benefit received.
The benefits received through Cost Allocation follow the law of diminishing returns, represented by an S-Curve. In short, there comes a point where increased effort no longer results in a notable increase in precision.
How can Cost Allocation be used in an organization's strategic goals? Explain