Page 140 - F2 - MA Integrated Workbook STUDENT 2018-19
P. 140
Chapter 7
Allocation and apportionment
Budgeted overheads
Step 1: Allocation or Apportionment
Cost centres
A B C
n
n
(Prod ) (Prod ) (Service)
Step 2: Reapportion
A B
Step 3: Absorb Production output
Allocation – when an overhead relates entirely to one production or
service centre it can be wholly attributed to that single production or
service centre. This is allocation.
Apportionment – when an overhead relates to more than one
production and/or service centre it is shared over these centres on a fair
or suitable basis. This is apportionment.
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