Cost Allocation
Definition
The assignment of shared costs, such as facilities, information technology infrastructure, and administrative services, to the departments that consume them. The cost allocation methodology must be documented and applied consistently across all periods. An undocumented cost allocation methodology makes departmental financial plans incomparable across periods and between departments.
Common Misapplication
The most common misapplication is changing the cost allocation methodology between periods without disclosing the change or restating prior periods, which makes departmental cost comparisons across periods unreliable.
FFI Standard Reference
This term is defined and applied in Book 6, Section 6.3: The Departmental Financial Planning Standard.
Related Terms
Citable URL
This term may be cited using the following permanent URL.
Full citation format: Founder Financial Infrastructure Standard, Beta v0.5, Glossary: Cost Allocation. https://ffistandard.org/glossary/cost-allocation/. 2026.