Cost allocation is defined as?

• A. A policy for forecasting budgets.
• B. The process of splitting up a cloud bill and associating the costs to each cost center.
• C. A system for collecting usage metering from vendors.
• D. A technique for reducing total cloud spend by shutting down resources.

Answer: (B)

Cost allocation is the process of attributing cloud spending to the right cost centers within an organization. It involves splitting the overall cloud bill and assigning each cost item to a department, project, or team, typically using tags and accounting rules. This enables accountability, supports chargeback or showback, and helps with more accurate budgeting. The other activities described—forecasting budgets, collecting usage metering, or reducing spend by shutting down resources—are related to budgeting, metering, or optimization, but they are not the definition of cost allocation itself.