Apportionment of overheads means that when an overhead relates to more than one production centre it is spread across the applicable centres. True or false?

Apportionment of overheads means that when an overhead relates to more than one production centre it is spread across the applicable centres. True or false?

• A. It is spread across the applicable centres
• B. It is not spread across centres
• C. It is charged to service centres only
• D. It is ignored

Answer: (B)

Apportionment is the process of sharing overhead costs that cannot be traced to a single cost centre among the centres that use or are affected by that cost, using a rational basis such as floor area, headcount, or machine hours. When an overhead relates to more than one production centre, it is allocated across those centres in proportion to the chosen basis. This ensures each centre bears a fair portion of the overhead relative to its use of the resource. So the statement is true: overheads related to multiple production centres are spread across the applicable centres. The alternative ideas would misrepresent how shared overheads are treated—for example, not spreading them, charging only to service centres, or ignoring them would distort costing.

Apportionment is the process of sharing overhead costs that cannot be traced to a single cost centre among the centres that use or are affected by that cost, using a rational basis such as floor area, headcount, or machine hours. When an overhead relates to more than one production centre, it is allocated across those centres in proportion to the chosen basis. This ensures each centre bears a fair portion of the overhead relative to its use of the resource. So the statement is true: overheads related to multiple production centres are spread across the applicable centres. The alternative ideas would misrepresent how shared overheads are treated—for example, not spreading them, charging only to service centres, or ignoring them would distort costing.