What is a Secondary Cost Pool?

A secondary cost pool accumulates those costs incurred to provide services to other parts of the company. There may be several secondary cost pools, depending upon the nature of the costs and how they will be allocated.

These costs are later allocated to primary cost pools that more directly relate to products and services. For example, if there is a large cost associated with computer services, these costs are stored separately in a data processing services cost pool and allocated based on computer usage. If there is another cost pool that contains building costs, these costs are stored separately in a facility services cost pool and allocated based on square footage used.

Types of Secondary Cost Pools

There are several types of secondary cost pools found within the typical organization. There are several examples:

Facility services. A business may allocate the cost to maintain and clean its facilities to the departments operating within those facilities.
Copy services. A business may have a central copy center, which charges its services out to using departments for a fee.
Legal services. The legal department of a business may charge out its time to the other departments, based on such matters as legal representation and contract reviews.
Data processing services. A business may have a central data processing facility, which uses various usage metrics to charge its cost out to using departments.