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Running head: COST ALLOCATION METHODS 1Cost Allocation MethodsKelsi DammannAshford UniversityHealth Care FinanceHCA 312Instructor Kevin HayesApril 1, 2016
COST ALLOCATION METHODS 2For this week’s assignment we were asked to discuss cost allocation and the different methods involved in cost allocation. The cost allocation method is used to identify and correctly allocate costs provided by a service (Smith, 2014). The main goal is to determine the costs for the services, confirm every price that is required for every product and service rendered, maintain control over all costs, and for the best use of all resources. There are several different methods that can be used for cost allocation and it’s important to determine the cost allocation of these services. Two most common cost allocation methods are the direct allocation method and the step-down method (Smith, 2014). The direct method, also called the direct apportionment method, seeks to allocate costs