![]() As long as the nurse continues to work his or her assigned shift within that unit, the salary and benefits accrued are associated with that unit. ![]() In a hospital, a nurse is normally assigned to a specific wing or floor, with the costs allocated to the general operation of that unit. From this perspective, cost allocation can be seen as a tool that helps track all costs associated with the ongoing operation more efficiently, since each cost is associated with specific departments or groups of departments within the organization.Ī simple example of cost allocation would be the wages or salary of an employee assigned to work in a specific department. Unlike a cost rating, the allocation is less concerned with the actual amount of the cost, and more concerned with allocating or assigning the cost to the correct unit within the organization. Cost allocation is the process of identifying and assigning the costs of services necessary for the operation of a business or other type of entity.
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