Cost Allocation Methods at Google

• Values:

• Direct Costs: $1,000,000
• Indirect Costs: $500,000
• Allocation Bases: Number of Employees, Machine Hours
• Requirements:

0. Allocate indirect costs using the number of employees as the allocation base.
1. Allocate indirect costs using machine hours as the allocation base.
2. Compare and contrast the results of the two allocation methods.
3. Discuss the importance of cost allocation in performance evaluation at Google.