Allocation methods are techniques used to distribute resources, costs, or revenues among different departments, projects, or products within an organization. Common methods include direct allocation, where costs are assigned directly to a specific department, and indirect allocation, which spreads costs across multiple areas based on predetermined criteria. These methods help organizations understand financial performance and make informed decisions. For example, the Activity-Based Costing method allocates costs based on actual activities, providing a more accurate picture of resource usage. Proper allocation ensures that each segment of the business is fairly charged for its share of costs, promoting efficiency and accountability.