Cost Allocation
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US Army Corps of Engineers - Walla Walla Project retrieved August 17, 2009 from: http://www.nww.usace.army.mil/lsr/reports/misc_reports/allocate.htm
City of Seattle Budget for 2009 - 2010 retrieved August 17, 2009 from: http://www.cityofseattle.net/financedepartment/0910adoptedbudget/Cost_Allocation_2009_Adopted_and_2010_Endorsed_Budget.pdf
US Department of Human Services, Financial Accounting, Division of Cost Allocation retrieved August 17, 2009 from: http://www.psc.gov/directory/2009directory.pdf (search for Cost Allocations)
The following items will be assessed in particular:
Cost Allocation
1. Why does the US Army Corp of Engineers worry about cost allocations? Aren't they a branch of the US Federal Government? Why does it matter whether or not costs are allocated?
2. The City of Seattle reading lists a series of costs and associated cost drivers for allocating these costs. Do you agree with the cost drivers (cost allocation factors)? Why do you suppose these drivers were selected? Does it make sense to have all of these individual costs and drivers identified or should there be a more uniform method of allocating costs? Why do they allocate costs anyway in a government (City Government) setting -- aren't cost allocation methods mostly for manufacturing companies?
3. Why does the US Department of Human Services have a special division just for Cost Allocation? What are some of the ways in which they adminster cost allocation for hospitals, colleges, and non-profit organizations?
4. Is cost allocation only relevant for govenment agencies like those above? Why or why not? Support your arguments with references or examples as appropriate
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This explanation provides you a comprehensive argument relating to Cost Allocation
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The following items will be assessed in particular:
Cost Allocation
1. Why does the US Army Corp of Engineers worry about cost allocations? Aren't they a branch of the US Federal Government? Why does it matter whether or not costs are allocated?
The US Army Corps of Engineers need to worry about the cost allocation because these allocations are made to derive an impartial distribution of project costs among authorized projects. For instance, the US Army Corps of Engineers may have several projects but to ensure that the funds are allocated for the projects which have been authorized. Yes, the US Army Corps of Engineers is a branch of the Federal Government but there are laws and regulations relating to reimbursement or cost-sharing that identifies recovery of costs incurred for the service or function. To comply with these laws and regulations the US Army Corps of Engineers have to worry about cost allocations.
It does matter whether or not cost are allocated. The reason is that cost allocation is an important part of the multipurpose planning process where cost-sharing will be required. It gives information. It matters because information is required that will help find the size and the proportion of estimated project costs that are reimbursable. US Army Corps of Engineers needs this information to test the financial feasibility and plan acceptability. Cost allocation is essential because it provides information needed for allocating actual expenses and makes sure that that during implementation and planning stage it provides information for guiding and assignment of actual expenses. Cost allocations are essential for US Army Corps of Engineers for allocation principles.
2. The City of Seattle reading lists a series of costs and associated cost drivers for allocating these costs. Do you agree with the cost drivers (cost allocation factors)? Why do you suppose these drivers were selected? Does it make sense to have all of these individual costs and drivers identified or should there be a more uniform method of allocating costs? ...
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- MBA, Eastern Institute for Integrated Learning in Management
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