Question 1 Introduction
It is important that the allocation and apportionment of overheads are reviewed at regular intervals to ensure that the methods being used are still valid.
Indirect costs can be identified directly with each unit of output.
Allocation of overheads is the charging to a particular cost centre of overheads that are incurred entirely by that cost centre.
Apportionment of overheads is the sharing of overheads over a number of cost units to which they relate.
It is important that the allocation and apportionment of overheads are reviewed at regular intervals to ensure that the methods being used are still valid.
One common method of apportioning the rent of a factory is on a basis of the floor area of the factory.
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