Cost allocation is the process of identifying, aggregating, and assigning costs to various separate activities. There is no overly precise method for charging costs to objects, so you use approximate methods to do so. The approximation bases used include, among others, square footage, headcount, cost of goods used and electricity consumption. The main purpose of cost allocation is to distribute costs in the fairest method possible and also to influence the pattern of cost behavior. The government always has various projects to undertake for the benefit of the nation, and the projects require proper cost allocation of the available resources. This is done to identify responsibility for reimbursement versus recovery, cost sharing, or both. The federal government conducts cost allocation with the goal of achieving an equitable distribution of project costs among the project scopes authorized or proposed for authorization. Laws and requirements requiring cost sharing or reimbursement specify recovery of costs incurred for the service. This makes cost allocation necessary for most multipurpose Federal projects with reimbursable purposes (U, S Army Corps of Engineers, 1998). To verify the financial feasibility and acceptability of the plan, information must be available on the extent and proportion of the estimated project cost that is reimbursable. This information can be obtained from the cost breakdown. Even where cost sharing is required in the multifunctional planning process, cost allocation can be applied. Cost allocation also provides the information needed to allocate actual expenses ensuring that the cost account is kept in line with the plan formulation and allocation principles during the subsequent c...... half of the document. ..... costs are allocated using several factors. This is because to determine the size and scope of a certain cost, certain factors must be considered. Therefore different categories of costs are treated differently and costs are allocated differently. So it is clear that cost allocation is a noble requirement for every project. Works CitedCity of Seattle Budget 2009-2010, (2011). Cost allocation. Retrieved from: http://www.cityofseattle.net/financedepartment/0910adoptedbudget/Cost_Allocation_2009_Adopted_and_2010_Endorsed_Budget.pdf Kulick Donald J, (1993). Cost allocation and tax administration. Retrieved from: http://www.workforcesecurity.doleta.gov/dmstree/gal/gal_pre_93/gal_04-91.htmU, S Army Corps of Engineers, (1998). Cost allocation. Retrieved from: http://www.nww.usace.army.mil/lsr/reports/misc_reports/allocate.htm