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Cost Allocation Plans for Oils October 30, 2013, Presenters: John Severn, Jr. CPA Paula McElweeSlide 1Slide 2Program Overview Participants will learn the following: The purpose, objectives, and contents

How to fill out cost allocation plans for

How to Fill Out Cost Allocation Plans:

1. Determine the purpose of the cost allocation plan: Before filling out the plan, it is important to understand why it is being created. Identify the specific project, program, or activity that requires cost allocation.
2. Gather necessary financial information: Collect all relevant financial data such as expenses, revenues, and resource usage for the specific project or program. Ensure that all relevant costs are accounted for and accurately recorded.
3. Allocate costs based on appropriate methods: There are different methods for allocating costs, such as direct allocation, step-down allocation, or activity-based allocation. Choose a method that best suits the project or program and ensure that it accurately reflects the cost drivers.
4. Define cost pools and cost centers: Divide the costs into different cost pools based on their nature or function. Create cost centers to allocate these costs to specific activities or departments within the organization.
5. Determine allocation bases: Identify allocation bases that best represent the drivers of each cost pool. For example, if allocating overhead costs, the allocation base could be labor hours, machine hours, or square footage.
6. Calculate the allocation rate: Calculate the allocation rate for each cost pool by dividing the total cost for the pool by the total allocation base. This rate represents the cost to allocate per unit of the allocation base.
7. Allocate costs to specific activities or departments: Use the allocation rate and allocation base to allocate costs to specific activities or departments. Apply the allocated costs proportionally based on the usage or benefit received from each activity or department.
8. Review and validate the allocation: Review the allocated costs to ensure they are reasonable and accurately reflect the relationship between the costs and the activities or departments. Validate the allocation by comparing it with historical data or benchmarking against similar projects or programs.

Who Needs Cost Allocation Plans:

1. Organizations with multiple projects or programs: Companies that have multiple ongoing projects or programs may need cost allocation plans to accurately allocate costs among different activities. This ensures that each project or program bears its fair share of costs.
2. Government agencies and non-profit organizations: Entities that receive funding from various sources and utilize resources for different programs often require cost allocation plans. These plans help allocate costs among different programs while satisfying the requirements of funding sources.
3. Cost-reimbursement contracts: Organizations that enter into cost-reimbursement contracts, such as government contractors, may need cost allocation plans to accurately track and allocate costs to meet contract requirements. This ensures compliance and proper reimbursement.

In summary, filling out cost allocation plans involves understanding the purpose, gathering financial information, allocating costs using appropriate methods, and validating the allocation. These plans are needed by organizations with multiple projects or programs, government agencies, non-profit organizations, and entities with cost-reimbursement contracts.

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What is cost allocation plans for?

Cost allocation plans are used to distribute shared costs among different departments or programs within an organization.

Who is required to file cost allocation plans for?

Non-profit organizations that receive federal funds are required to file cost allocation plans.

How to fill out cost allocation plans for?

Cost allocation plans can be filled out by documenting the methods used to distribute costs and the rationale behind those methods.

What is the purpose of cost allocation plans for?

The purpose of cost allocation plans is to ensure that shared costs are distributed fairly and accurately.

What information must be reported on cost allocation plans for?

Cost allocation plans must report details on the methods used to allocate costs, the basis for allocation, and any changes in allocation methods.