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Direct Method of Cost Allocation Not Difficult to Learn with Myhomeworkhelp.Com

Microeconomics is the branch of economics dealing with minute aspects of production and supply. Cost allocation tools are an integral part of this learning.

Understanding meaning of overheads

Cost allocation of overheads matters a lot for fixing the production cost of goods. Before proceeding to look for direct method homework help, it is important to know what overhead expenses are. Overhead expense is an expense which is not directly related to manufacturing. But indirectly, it assists in manufacturing activities. An example is cafeteria expenses. Though cafeteria does not support manufacture, it helps workers by providing nourishment. Allocation of overheads requires some attention as it cannot be directly linked to any product.

What is direct method of cost allocation?

Direct method is the process by which overhead charges of service departments are directly charged to production departments. All charges of service departments are transferred to production sections. This allocation is done on some logical basis. For example, best way to allocate costs of cafeteria will be based on a number of workers in each production section. While searching for direct method assignment help, students should bear this in mind.

Pros and cons of direct method

Like other methods of cost allocation, this also has advantages and disadvantages.


  • It is the easiest and simplest method of cost allocation. There is no cause for confusions regarding allocation.
  • Logical basis for allocation ensures that cost is equitably distributed.


  • This method does not take into account services provided by one service department to another service department.
  • It wrongly assumes that servicing sections are mutually independent.
  • Some costs may be ignored in this method as the inter-departmental use of servicing charges are not considered.

Proper learning will help students in getting direct method homework help.

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Costing and related areas are not received favorably by most students. They have lots of grievances about this:

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