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A determining factor in deciding whether a cost can be allocated using a direct cost allocation plan is the allocation base and the type of cost.  The base must accurately measure the degree of benefit derived by each cost objective and must remain constant.  For example, facility related costs could be allocated with a high degree of accuracy to each cost objective in proportion to the square footage occupied by the cost objective.  The square footage occupied by a cost objective should remain fairly constant over a period of time.  The types of costs allocated under a direct cost allocation plan are typically referred to as joint costs.  They can be allocated and charged directly to the general ledger (at the transaction level) through the accounts payable application at the time of payment.   However, cost pools may be used for some categories of allocable direct costs for periodic allocation to benefited cost objectives. Source: DSHS Contractor’s Financial Procedures Manual

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