You are going to get a zillion different answers - so you will have the luxury of picking what you like out of each of response.
here is what I do - I have a 10 year old daughter.
She doesn't get an 'allowance', per say. Anything that has to do with HER she is responsible for doing (clearning her own plate, picking up her stuff, cleaning her room, getting good grades etc)- I refer to that as the price of admission to the planet - welcome aboard!
Anything that I (or my mother - we all live together) need her to do to help us, she does and she does not get paid for that (ie help make dinner, help set/clear the table, help me fold clothes, help me unload the dishwasher etc). That is simply what family does to be helpful to each other - like we help her with homework, piano etc.
I have posted some 'work' for her to do on the refrigerator. just like in real life she can chose to do this work if she wants. If she does it - she gets paid a specified amount. I am her 'employer' for the work and so I inspect her work and if she has done a good job she 'earns' her money. If she doesn't do a good job (spots on the mirror, dust in the corner of the stairs) then she has to re-do the job until it is done correctly in order to 'earn' her money.
The money has to be split into 3 'banks' - hers, saving and helping (tithing/giving/whatever you call it). 10% minimum to saving and helping.
She has the ability to get the following amounts of money weekly:
$5 - clean the bathroom (this means really clean it. at 10 yrs old, I don't have to go behind her and do ANYTHING after she is there. the toilet, empty the trash, wipe mirrors, sweep and mop floor, clean shower etc).
We have 2 bathrooms that she can clean on the weekend so she could earn $5 for each.
$1 - mop the hallway from the backdoor to the kitchen as well as the front foyer
$1 - sweep and then hand wipe with wood cleaner the stairs going to the basement.
$1 - mop the basement tile floor
$1 - sweep the leaves / shovel the snow off the path in the backyard (seasonally - but as needed)
So basically she could earn up to $13 each week if she did everything on the list (more in the fall/winter). I don't let her start the list until all of HER stuff is done. Homework must be done. Her room must be picked up. Piano must have been practiced etc.
I pay for clothing, extra-curricular activities, food and admission to anywhere I am going I take her (ie movies etc). There have been times when we were clothes shopping and she wanted an extra shirt (I always tell her the budget I have set ahead of time, then she makes decisions about what she gets) and she will have to pay for it if it is over budget.
If we are going on vacation I will give her a pre-set amount (usually $20) spending money - if she wants to spend more than that she has to use her own money.
She wants a DSXL so she is saving every penny and asking for extra 'work' to earn it more quickly. I am coming up with things for her to so that she can earn money.
As far as what is too much? I think it depends. For me - school comes first. Being responsbile for herself comes second and then it's whatever SHE wants to do to earn money. I think giving her the ability to regulate the amount of work she does and therefore the amount of money she 'earns' teaches her self-motivation.