ALLOCATION &

APPORTIONMENT OF
OVERHEADS

By: - Onkar Sule

Roll No : - 54
 Overheads
 Indirect costs which cannot be easily allocated to any
specific Job or Process because they are not capable
of being identified with any specific Job or Process.

 Also called as Operating cost.

 Operating Cost = Cost of goods sold + Operating

Expenses
 OVERHEAD
Few more names

•Overhead expenses
•Overhead Cost
•Overhead Charges
•Overhead expenditure
•On cost
•Supplementary costs
•Non-productive costs
•Burden Costs
•Loading Costs
•Indirect Cost
 Allocation and Apportionment of Overhead
 Process by which cost items are charged direct to a cost unit or
cost centre. It is the process of charging the traceable amount
of overhead to cost centre or cost unit. Overhead costs by their
nature cannot often be related to one particular cost centre.

 Apportionment is the division of costs among two or more cost

centers in proportion to the estimated benefits received, using
some logical basis.
Allocation of overhead
Overhead

Fabricati Assembli Machinin Maintena

Power Stores Canteen
on ng g nce
 Distribution of Overhead

APPORTIONMENT
Common costs are
apportioned
Amongst different
departments
or cost centers on some
basis
Common
Costs
Type of overhead Basis of apportionment

1. Rent and rates, heating, repairs, Area occupied(Floor space)

depreciation of buildings
2. Lighting Number of light points, area occupied

3. Power Horsepower of machines or machine hours

4. Depreciation, insurance, repairs and Book value of asset or original cost

maintenance of a plant and vehicle
5. Personnel, Staff Welfare Canteen, wages, Number of employees or wages paid
Cost office
6. Stores No. of stores requisitions or value of material
issued or value of material stored

7. Selling and Distribution Sales value

8. Advertisement Sales value