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Cost & pricing
Cost allocation
Assigning shared costs — rent, IT, finance — to products, departments, or customers on a driver like headcount or revenue, so their full cost can be seen.
Owned by: Senior analystTest band: Senior analyst
In practice
Allocations are opinions with decimals. Use them for pricing and profitability views; never make a decision that hinges only on how overhead was spread.
The kind of thing the test asks
- After allocating overhead by headcount, a small department shows a loss. Before acting, the analyst should…