[A] Cost Allocation refers to the division of total cost involved in the production process of making the finished good.

[B] It means dividing the cost between components like raw materials and scrap.

[C] For eg. if 10% of the cost is allocated to scrap, it means that you can get 10% worth of the total cost if you sell the scrap produced.

Note: For accounting purposes and accurate cost calculation, generally 100% cost is allocated in the finished good section and none to scrap.

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