What is the main difference between allocation and apportionment of overhead?
Correct answer: A. Allocation assigns a whole cost, while apportionment shares a cost
- A. Allocation assigns a whole cost, while apportionment shares a cost
- B. Allocation shares a cost, while apportionment assigns a whole cost
- C. Allocation records revenue, while apportionment records expenses
- D. Allocation measures output, while apportionment measures labour
Explanation
Allocation charges an entire overhead item to one cost centre when it can be identified with that centre. Apportionment divides a common overhead among two or more cost centres using a reasonable basis.
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About Cost Accounting
Cost accounting measures and analyses the cost of producing goods or providing services for planning, control and pricing decisions. It covers direct and indirect costs, fixed and variable costs, job and process costing, break-even analysis, marginal costing, overhead allocation, and the difference between product cost and period cost.
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