The sum of all cost centre allocations for a particular expense must be equal to the final amount of that expenses?
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Answer:
Allocation is the process of assigning a cost, or a group of costs, to one or more cost objectives. Costs may be allocated only if they advance the work of the project in the same proportion as the cost. For example, technical supplies are allocable if they benefit a project. In addition, costs must be supported by evidence of direct benefit to the project.
A cost center is a function that does not add to profit but still costs the organization.
It contributes indirectly to the company’s profitability. Cost center allocation is the distribution of particular expenses across cost centers or business units. It is a process of assigning costs to different departments. When cost is allocated in the right way the business can trace particular cost objects. if cost is allocated to the wrong department it is allocated to those departments that do not yield returns.