Principles of apportionment of overheads The unit aims to equip readers with the ability to understand, classify, and This chapter on overhead costs explains the classification, allocation, apportionment, and absorption of overheads, which include indirect materials, labor, and expenses. This is because overhead cost is charged out to fewer units. When overhead is associated with a specific department, cost allocation is used. This process is generally used to cover central cost items such as salaries, general overhead, and ongoing running costs. Procedures/steps of overheads distribution 4. Feb 16, 2020 · Allocation and Apportionment of overheads is the process of identifying production overhead expenses with different departments or cost centres. Examples of Mar 3, 2023 · Also, departmentalization of overheads is undertaken in two stages: Allocation of overheads Apportionment of overhead expenses An overview of these stages is given below. Chapter 8 discusses the accounting for overheads, classifying expenses into direct and indirect categories, and the importance of absorption costing. It outlines various types of overheads, steps in overhead accounting, bases for apportionment, principles of apportionment, methods of reapportionment, absorption methods, and how under/over Mar 26, 2019 · The various principles of apportionment of overheads - As stated earlier, the overheads (normal cost) of the common firm have to be attached to different production and service departments on some common basis. Bases of Apportionment The following is a list of various bases applied in apportionment of overheads to various cost centers: Basis of apportionment Overheads to which basis applies 1 Area Rent, rates, heat and light, depreciation of buildings, maintenance of buildings, and insurance of premises. #NumericalOnAllocation#NumericalOnApportionment#Allocation&ApportionmentNumerical#OverhaedCostControl#OverheadCostMeaning#OverheadCostType2nd YouTube Channel Mar 11, 2021 · In this video of Cost Accounting Allocation, Apportionment, and Absorption of overheads are discussed. This application of overheads is In this article we will discuss about the procedure for linking manufacturing overhead to cost units. Overheads that can be directly identified with a department are allocated, while common overheads are apportioned based on suitable criteria. The standard deals with the method of collection, allocation, apportionment and absorption of overheads” In this Standard, the standard portions have been set in bold italic type Mar 3, 2023 · Overhead Absorption: Definition Overhead absorption is defined as the allotment of overheads to cost units. Nov 30, 2020 · Learning Objectives • Definition of Overheads • Assignment of direct and indirect costs • Classification of Overheads • Identify cost behavior patterns • Understand the principles of overheads apportionment and absorption. It is also known as ‘Departmentalization of Overheads. What is apportionment in accounting? Jun 22, 2024 · ACCOUNTING FOR OVERHEAD COST Objectives After studying this chapter you will Understand the principles of overhead apportionment Understand the difference between primary and secondary distribution of overheads Know the methods of transferring service department costs to the production departments Understand the methods of overhead absorption Know how to calculate over or under absorption of Oct 10, 2023 · The "Secondary Apportionment of Overheads Using Repeated or Continuous Method" is a critical process within cost accounting and financial management that pla 16 PRINCIPLES OF APPORTIONMENT Utility or Service Principle Principle Service or Benefits received By the department 17 PRINCIPLES OF APPORTIONMENT Ability To Pay What the Traffic can bear Basis of Sales or Profit 18 PRINCIPLES OF APPORTIONMENT Survey Method When Difficult to select Basis Production Manager’s Salary (Time spent in Each Dept) Bcom 2nd year cost accounting lecture notes unit iv overhead definition: overhead is defined as aggregate of indirect material cost, indirect wages, and The document outlines costing principles in financial and management accounting, focusing on the importance of cost information for decision-making, budgeting, and profitability analysis. The document also emphasizes methods for estimating, allocating, and controlling these overhead costs through various accounting principles and practices. It begins by introducing direct and indirect costs. Nov 10, 2023 · In this article we will discuss briefly about the overhead costs, Its allocation and apportionment. The major steps in overhead accounting are to collect overhead details, distribute overhead to cost centers, and reapportion service department costs to production departments. labour hour Session 7 Accounting for Overheads FOCUS This session covers the following content from the ACCA Study Guide. 1st Example The Bengal Wholesale Co. e. The basis used for the apportionment of costs between a number of cost centres when the costs are to be shared between them equitably. Finally, overheads are absorbed by cost objects Overhead is applied based on a predetermined formula, after careful analysis of the appropriate cost drivers for the allocation. When the amount of overheads has been determined on the predetermined basis for each cost center, the next step is to charge it to production. 2. Detailed discussion is done on Apportionment of Overheads using Direct Method, Step Down Method and At some point, a company may wish to know the total cost of a particular product or service. Cost apportionment, a vital concept in accounting, involves the distribution of costs across various departments, products, or periods based on specific criteria. It defines overheads as indirect costs that cannot be directly traced to a cost object. These indirect costs—including everything from factory rent to supervisor salaries—cannot be directly traced to a specific product but are essential for business operations. It categorizes overheads into factory, administrative, sales, distribution, and research & development overheads, detailing their impact on cost accounting and management. medical, when these are used for processes. Common bases for apportioning overhead include direct allocation Manufacturing overhead costing comprised of the following steps- Collection of factory overhead costs Allocation of overhead costs Apportionment or distribution of overhead costs Re-distribution of service department cost to production department Absorption of overheads. Cost Accounting Techniques 1. For example, rent and business rates are seldom incurred by individual cost centres, therefore floor area is often used as a basis of apportionment to share the costs The assumption of this method is that administration overheads have no direct relationship with manufacturing and selling activities of an undertaking. The chapter also covers the principles of apportionment and the methods What are the various principles of apportionment of overheads? explain and give examples of the bases used for apportionment and re-apportionment? - 2958130 Apr 11, 2025 · Cost apportionment is a nuanced process that requires careful consideration of various factors to ensure that it aligns with an organization's strategic goals, operational practices, and the principles of fairness and efficiency. This is done to accurately track the cost of producing goods or services and make informed business decisions. supervisors' salary, office lighting Jul 15, 2025 · On this page Calculate apportioning of a payment Reliable systems, processes, procedures and policies Allocating corporate overheads as part of staff costs Relevance of the apportionment methods used Keeping up to date Additional principles to assist apportionment Joint ventures and apportionment Jun 1, 2020 · Apportionment of Overhead Cost (Simultaneous) Distribution Method Officials Urge Trump to Stop White House Demolition Amid Shocking Ballroom Project: A Closer Look The overheads, which can be easily shared by the two or more departments on suitable basis, are called apportionment. Mar 5, 2024 · Overheads represent one of the most critical yet often misunderstood components in cost accounting. The document outlines the key steps in overhead accounting: classification of overheads, codification and collection, allocation and apportionment to cost centers, and absorption into product costs. com Wherever possible, the overheads are to be allocated. Arguments against absorption costing Absorption costing involves the apportionment of overhead, which can be subjective. Following is a pictorial representation of the various aspects of overhead accounting. Now, let's move on to the principles of Mar 20, 2019 · The Need for Cost Apportionment Service Department (Cafeteria) Operating Department (Machining) Service Department (Accounting) The Products Operating Department (Assembly) Service Department (Personnel) Second Stage Apportionment Operating department overhead costs and apportioned service department costs are applied to products. It is required under the rules of various accounting frameworks. Definitions and concepts 3. Dec 14, 2008 · Reciprocal Overhead Apportionment: Trial & Error Method . The principle is that . An account called “Factory Overhead” is credited to reflect this overhead application to work in process. In other words, over­head is the total of indirect material costs, indirect labour costs, and indirect expenses. Materials requisitions and worker’s time sheets/payroll records provide Re-apportionment of overheads: Service department to Production departments apportionment of apportionment of By actual units at predetermined rate 4. The records kept of direct costs, such as materials and labour, enable these costs to be identified with specific units. It defines overheads as indirect costs that cannot be directly attributed to a specific cost object. This summary provides a clear view of how overheads are distributed, facilitating better cost control and decision-making. The first stage of overhead apportionment is to identify all overhead costs as production department, production service department, administration or selling and distribution overhead. Collection, Classification, Apportionment and Allocation of Overheads 1. 1 Basis of Apportionment Figures - uploaded by Joseph Anbarasu Author content Principal of Apportionment IS VIDEO ME HUM OVERHEADS KA ALLOCATION AND APPORTIONMENT KESE KIA JATA HAI YE DEKEHNGE AUR SIKHENGE KI KESE TOTAL OVERHEADS KO DEPARTMENT WISE ALLOCATE KIA This document discusses the allocation and apportionment of overheads. However, an organisation also incurs indirect Sep 25, 2024 · Allocation and Apportionment of expenses- Allocation and apportionment of expenses are accounting methods used to distribute costs to different departments, projects, or products within an organization. Ability to Bear Allocation and Apportionment of Overheads Overheads are common costs incurred for the benefits of a number of costs centers or cost units. This document discusses cost allocation, apportionment, and absorption of overheads. It covers direct and indirect expenses, various types of overheads, and methods for allocation, apportionment, and absorption of overhead costs. iii) Allocate and 3. They include expenses such as rent, utilities, salaries of support staff, and depreciation of equipment. Allocation is the process of 7 Overheads Analysis CHAPTER OUTLINE 1. Understand “inter-service distribution” and different methods of apportionment of overheads. Apportionment and absorption of Production Overheads5. The following points highlight the five main steps in overhead accounting. This video cont Jul 12, 2025 · Overhead allocation is the apportionment of indirect costs to produced goods. Additionally, it provides examples of overhead apportionment Overhead cost apportionment is the process of allocating indirect costs, such as rent, utilities, and administrative expenses, to different cost objects, like products or departments. Key takeaways include selecting an equitable allocation base, understanding the apportionment process, and the impact of overhead allocation on product costing and profitability. 1 Allocation and Apportionment of Overheads-: Meaning of Allocation, Apportionment of overheads Principles of Apportionment, Bases of Apportionment Preparation of Statement of Primary Distribution of Overheads. Apportionment of overheads refers to the method of distributing these indirect costs among different departments or cost centers in a fair and logical manner. OVERHEADS- ABSORPTION COSTING METHOD Standing Orders: In every manufacturing business, expenses are incurred on direct materials and direct labour in respect of several jobs or other units of The document outlines the principles of accounting for overheads, including their definition, classification, and methods of calculation and allocation. Cost apportionment is different to cost allocation or cost absorption. The CIMA defines overhead In this video, I have explained the allocation, absorption and apportionment of overheads with the help of an example. The key methods discussed are direct allocation, apportionment based on factors like Apr 8, 2014 · As we know, Apportionment of overhead means to divide total cost of overhead among different departments or branches or cost centers of a company. Cost Allocation 7. Classifications of Overheads Costs 2. This involves taking each cost center and applying its overheads to all the products that pass through it. Understanding overheads is fundamental to accurate product costing, pricing decisions, and overall business May 10, 2025 · OVERHEAD LEARNING OBJECTIVES • Explain overhead and types of overhead • Explain overhead classification and analysis • Understand the principles and methods of allocation, apportionment and re-apportionment of overhead • Calculate the various overhead absorption rates i. Understand the term “allocation” and “apportionment” of overheads and the basis of apportionment of overheads. Overheads are allocated to cost centers and departments, then apportioned between production and service departments. There are various types of overheads that must be classified. Introduction 2. 4. It defines allocation as allotting whole costs to cost centers, while apportionment is distributing common costs to multiple cost centers based on an appropriate basis. Ascertain semi-variable overheads by various methods. This ensures that expenses are accurately allocated, enabling precise financial tracking and reporting. Aug 11, 2023 · What is Overhead Cost Control? Overhead cost control refers to the process of managing and minimizing the indirect expenses associated with running a business or organization. This encompasses comprehending their definition, their relationship to direct costs, as well as distinguishing between their fixed and variable components. Additionally, it discusses the procedures for This document discusses overhead costs and their accounting treatment. Benefits Received: Overheads #hstutorial Overhead Cost Apportionment. However, a company also incurs indirect expenses, Appointment of overhead cost Overhead apportionment occurs when overheads cannot be identified as belonging to a specific cost centre and are therefore shared out on an equitable basis. It discusses methods such as traditional costing and activity-based costing (ABC) for managing overhead costs, highlighting the importance of correct allocation to ensure accurate product costing. It is difficult to fix suitable bases for apportionment to cost units. Overhead Distribution ,Allocation & Apportionment, Problem 1. On the other hand, cost apportionment entails the proportionate distribution of costs to other departments justifiable. 1 The guidance on accounting for overheads is intended to consolidate and supersede a range of previous CIPFAguidance, including aspects of The Management of Overheads in Local Authorities and Accounting for Central Services. Codification of Overheads 3. 1 Introduction In your certifi cate studies (or equivalent) you should have already encountered the basic principles and concepts involved in cost accounting. As such, they are to be allocated among the units of output of a particular department or a number of departments or cost centers. what are the various principles of apportionment of overheads explain and give examples of the bases used for apportionment and re apportionment 13853Overheads are indirect costs that cannot be directly attributed to a specific product or service. However, absorption costing is often required for external financial reporting and for income tax reporting. ’ Overhead cost comprises indirect material, indirect labour and indirect expanses. These indirect costs are expenses that cannot be directly traced to specific products or services, such as rent, utilities, salaries of administrative staff, and depreciation of fixed assets. Explaining Allocation and Apportionment in Context Sections below further define and illustrate cost allocation and cost apportionment in context with similar terms and concepts, focusing on four themes: Explaining cost allocation and cost apportionment principles. A system of better distribution of overheads can only ensure greater accuracy in determination of cost of products or Principles of Apportionment of Overhead Costs The principles of apportionment of overhead costs are essential for allocating indirect costs to cost centers or products. Definition of Overheads: CIMA defines Overhead Cost as "the total cost of indirect materials, indirect labour and Principles of Apportionment of Overheads The apportionment of overheads involves distributing indirect costs to cost centers or products. Principles of Apportionment of Overheads The apportionment of overheads involves distributing indirect costs to cost centers or products. 1. These indirect costs, often referred to as overhead costs, include various expenses that are not directly tied to producing goods or services but are necessary for the overall operation of the business. The items of administration overhead are fixed in nature and therefore called ‘period costs’. Appraise the various methods involved in absorption of factory overheads. It covers topics like allocation, apportionment, and absorption of overheads. F. If you have any question Apr 17, 2024 · In the realm of accounting and finance, the principles of cost allocation and apportionment are pivotal for accurate financial reporting and strategic decision-making. Absorption costing includes 3 stages, namely apportionment of overheads, reapportionment or allocation of service (non-production) cost centre overheads and also absorption of overhead. Understand how each method is used to assign costs to specific cost objects. Service department costs are first allocated The document covers the concept of overheads in cost accounting, defining them as indirect costs essential for business operations but not directly traceable to products or services. Allocation Vs - Selection from Cost Accounting [Book] Absorption costing uses the total direct costs and overhead costs associated with manufacturing a product as the cost base. This ensures that overheads are accurately attributed to the departments or products benefiting from them. It explains the importance of overhead absorption rates (OAR) in determining the total cost of products and the various bases for apportioning these costs among production and service cost centers. Overheads are indirect costs that cannot be directly attributed to specific cost objects, like products or services. Principles of apportionment include actual benefits, potential benefits, specific criteria, and ability to pay. Collection of Overheads 4. Under this method, overhead should be distributed in proportion to the sales ability, income or profitability of the departments, territories, basis of products etc. Allocation of Overheads The process of charging the full amount of overhead costs to a specific cost center is known as the allocation of factory overheads. This document outlines methods for allocating, apportioning, and absorbing overheads. It classifies overheads into categories such as manufacturing, administrative, selling, and research and development, while also discussing methods of allocation, apportionment, and absorption of these costs Nov 20, 2022 · Within this video I'll walk through a worked example on how to allocate apportion and reapportion costs across different departments. Let us make in-depth study of types of department, allocation and apportionment of overhead to cost centres, its bases, principles and advantages of departmentalisation. Departmentalisation of Overheads 5. The overhead, being common/general cost incurred for number of units/cost centres, is to be allocated and apportioned This is also known as departmentalisation of overhead. g. Over/under absorption of overheads 5. Overheads are costs, which are not traced directly to cost units. It provides detailed examples and problems related to overhead distribution among production and service departments, demonstrating various methods such as step ladder and reciprocal Jul 7, 2022 · Apportionment of Overhead Expenses: Definition Apportionment is the process of distributing overhead items to cost centers on a fair and reasonable basis. CIMA, London has defined it as “that part of cost attribution which shares costs among two or more cost centers or Aug 3, 2020 · Cost apportionment is used to apportion overhead to departments or cost centers. Dec 31, 2007 · First, the overhead is collected from different source documents, for different items of overhead expenses, the documents which are used for the collection, allocation and apportionment of overheads are standing order numbers, departmental distribution summary, journal, invoice and payroll. Specifi cally, you should be familiar with the manner in which the costs of objects and activities are determined through an exercise of cost allocation, apportionment and absorption. The document outlines the principles of Strategic Cost Management, focusing on overhead classification, allocation, and apportionment methods, including traditional costing and Activity Based Costing (ABC). departmental or blanket • Under absorbed and over absorbed of overhead Jul 23, 2014 · (CAS -2)5. Apr 1, 2016 · D appealed the IPEC judgment on account of profits. This distribution of overheads among departments is known as “Apportionment”. See full list on financestrategists. Classification of Overheads 4. Here we have given two examples for learning apportionment of overheads. So, for knowing it detail, it is better to understand it with practical examples. Watch this Video upto the End to know Complete about Allocation and Apportionment of Overheads which includes- (i) Concept of Allocation and Apportionment of The document discusses the departmentalization of overheads in organizations. It defines cost allocation as directly charging identifiable costs to cost centers. Allocation of Overheads 5. 2 Reapportionment of Overheads of Service Department to Production Department/ Secondary Distribution of Overhead-: Meaning Classification of overheads (fixed, variable, semi-variable) Allocation vs apportionment of overheads Re-apportionment of service department costs Overhead absorption methods (e. Overhead Cost Control Part-3 | Allocation and Apportionment of Overhead | Cost Accounting Chapter-7 CA Inter Costing fastrack Revision Marathon Jan 25 | Overhead cost Revision | CA Purushottam Agarwal Enjoy the videos and music you love, upload original content, and share it all with friends, family, and the world on YouTube. Collection and Codification of Overheads 4. This document discusses the classification, accounting, apportionment, absorption, and reconciliation of overheads. Overheads though not directly related to the items being manufactured, should finally form part of the total cost of the products being manufactured. The basis is determined according to the extent of services derived by the departments or benefits available to the department. For example, the cost of heating and lighting can be apportioned based on the floor area occupied by each department. It then discusses the objectives of understanding the different departments in an organization and analyzing the primary and secondary distribution of overheads. Learn the Differences between cost allocation and cost apportionment. Overheads are allocated or apportioned to products or services using various methods like activity-based costing or predetermined overhead rates. It outlines various types of overheads, steps in overhead accounting, bases for apportionment, principles of apportionment, methods of reapportionment, absorption methods, and how under/over COST ACCOUNTING STANDARD ON “OVERHEADS” The following is the text of the COST ACCOUNTING STANDARD 3 (CAS- 3) issued by the Council of the Institute of Cost and Works Accountants of India on “Overheads”. Apportionment refers to the distribution of overheads among departments or cost centers on an equitable basis. The standard deals with the method of collection, allocation, apportionment and absorption of overheads” In this Standard, the standard portions have been set in bold italic type COST ACCOUNTING STANDARD ON “OVERHEADS” The following is the text of the COST ACCOUNTING STANDARD 3 (CAS- 3) issued by the Council of the Institute of Cost and Works Accountants of India on “Overheads”. It explains the • Understand the meaning of overhea ds and the methods of their classification • Describe the meaning of allocation, apportionment, re-apportionment and absorption of overh eads • Know the various methods of absorption of overheads • Explain machine hour rate method of absorpt ion of overhead and understand AGENDA ITEMS 1. This occurs when an overhead cannot be directly assigned to one particular cost centre. Next, it describes the types of departments as production and service departments. You should also be familiar with basic cost Sep 14, 2024 · Apportionment of overhead is the process of allocating indirect costs, also known as overhead costs, to different departments, products, or services within a business. In order to arrive at the total cost of production, overhead is added to the prime cost. 1 Introduction In this chapter you will learn about the analysis of indirect costs or overheads. Hello Students, I Hope that this Video lecture will help you to understand the Concept Of Overhead Cost Control -Meaning ,Classification . is making a study of the relative profitability of the Apr 6, 2020 · Definition And Meanings Of Apportionment Of Overheads There are certain overhead expenses which cannot be charged totally to a specific department or shop, Such expenses are apportioned in a In this article we will discuss about:- 1. Sep 19, 2024 · *Overhead Cost Control Part-3 | Allocation and Apportionment of Overhead | Cost Accounting Chapter-7* – your go-to channel for mastering commerce subjects! 📚 In this video, we dive deep into The document will cover types of departments, allocation and apportionment of overheads, principles of apportioning overhead costs, and the primary and secondary distribution of overheads. Repairs & Maintenance Actual repairs Nov 7, 2022 · This video from Commerce Specialist explains Overhead Allocation and Apportionment Methods. Allocation and Apportionment of Overheads. ii) Describe the procedures involved in determining production overhead absorption rates. Primary distribution involves apportionment or allocation of overhead to all departments in a factory on logical and rational basis. Overhead refers to indirect costs that cannot be traced to specific products or services. The steps are: 1. Cost apportionment, on the other hand, involves the distribution of costs that cannot be directly assigned, such as overhead costs, across multiple departments or projects based on a fair and reasonable basis. Mar 12, 2024 · The overheads distribution summary involves allocating and apportioning overheads to production and service departments. The standard describes collecting overheads from accounts, allocating direct costs, apportioning indirect costs across cost centers, and absorbing overheads into . Several principles guide this process: Causality: Overheads should be apportioned based on the cause-and-effect relationship with the cost object. However, if it is not possible to charge the overheads to a particular cost centre or cost unit, apportioned to various departments on some suitable basis. In this chapter we look at the allocation and apportionment of production overheads. Jan 8, 2025 · Discover how cost accounting treats overhead expenses, how those expenses are different from direct labor, and what counts as overhead. How to Link Manufacturing Overhead to Cost Units: Rate Formula, Examples and Procedure. Nov 23, 2023 · Cost allocation directly assigns costs to specific cost objects, such as projects, departments, or products, based on a direct relationship. It includes expenses such as rent, utilities, depreciation, and administrative salaries. Steps in Accounting of Overheads 4. #costing #commerce #cost #icai #cainter Partial preview of the text Download Cost Allocation, Apportionment and Absorption of Overheads and more Accounting Lecture notes in PDF only on Docsity! Cost Allocation, Apportionment and Absorption of Overheads 1 Learning Objectives • To understand and apply the cost concepts – Cost Allocation – Apportionment of Overheads – Absorption of Overheads 2 Cost Allocation- Examples 5 At some point an organisation may wish to know the total cost of a particular product or service. Wherever possible, the overheads are to be allocated. For example, machine maintenance costs can be apportioned based on machine hours. In contrast, cost apportionment involves the proportionate distribution of cost to different departments, on a reasonable basis. Apportionment of Overheads 6. Therefore, they cannot be identified and allocated directly to a particular unit, of output. The terms 'burden', 'supplementary costs', 'on costs', and 'indirect expenses' are used interchangeably for overhead. Absorption of Overheads. An overhead analysis must be constructed, inserted are for those overheads whichcentr can es - be in this case, indirect wagesother and overheads indirect then apport ioned on the basis shown in Figure Insome instances, it may be possible to apportionment than that used in Figure method shown 6. The CAS-3 : “Overheads” Introduction In Cost Accounting the analysis and collection overheads, their allocation and apportionment to different cost centres and absorption to products or services plays an important role in determination of cost well as control purposes. Decision The court held that the IPEC had misdirected itself on both the principles of apportionment of profit and on the deduction of overheads, and remitted the case to the IPEC. Overhead refers to indirect costs that cannot be traced to a specific product or service. Jul 13, 2023 · Apportionment of costs is the process of sharing a group’s expenditure among the individual funding streams/programmes being implemented. Treatment of over/under absorption in accounting 08-12-2021 1 fOVERHEAD COSTING Introduction Direct costs normally can be conveniently identified/allocated to specific jobs. 1 Overheads are to be apportionment to different cost centres based on following 2 principles:i) Cause and Effect – Cause is the process or operation or activity and effect is the incurrence of cost. May 27, 2023 · Because overhead allocation is essentially a departmentalization of expenses, the overheads are allotted to the department directly. An account of profits was limited to profits actually made in order to prevent the defendant’s unjust enrichment. This document provides a comprehensive overview of overheads in cost accounting, detailing their classification, accounting methods, and importance in financial reporting. A system of better distribution of overheads can only ensure greater accuracy in determination of cost of products or services 2. Mar 11, 2024 · Allocation involves assigning entire overhead costs to specific cost centers, while apportionment distributes common overheads among multiple cost centers based on equitable criteria. Following are the main bases of overhead apportionment utilized in manufacturing concerns: As allocation of overhead is a sheer process of departmentalization of expenses, the overheads are directly assigned to the department. Overheads are indirect costs and hence there are numerous difficulties in charging the overheads to the units produced. Further quidance on detailed overhead apportion