Date Particulars L.F. Deptt. A Deptt. B Deptt. C Deptt. D
The same pattern of rulings may be followed in case of other subsidiary booksalso.
DEPARTMENTALISATION OF EXPENSES
In order to ascertain the profit or loss made by each department, it is necessarythat each department is charged with a proper share of the various businessexpenses. The following basis may be adopted for departmentalization of suchexpenses:
Expenses incurred specifically for a particular department should bedirectly charged to that department. For example, salaries payable to eachof the departmental managers will be charged to the respectivedepartments. Similarly if there are separate electricity metres for each of the departments, the electricity should be charged to each of thedepartments on the basis of the electricity bills received for each one of them.
Expenses which have been incurred for the business as a whole butcapable of being apportioned over different departments on a suitablebasis should be charged to the different departments, on such basis. Of course, there are no hard and fast rules as regards the basis to beapplied for apportionment of such expenses. However, the following basisfor apportionment may be adopted:a.Departmental wages. Expenses which directly vary with the department wagescan be apportioned on this basis. For example, premium for workmen’scompensation, insurance, E.S.I. may be apportioned on this basis.b.Capital value of the assets. Expenses such as depreciation of buildings, plantsand machinery, fire insurance premiums in respect of these assets etc., may beapportioned on this basis.
Floor area. Expenses such as lighting ( unless metered separately), rent andrates, wages of night watchman etc.. may be apportioned on this basis.
Number of workers employed. Expenses of workers’ canteen, welfare, personneland time keeping departments etc.. may be apportioned on this basis.