5. Which of the following is NOT used as a base for
apportionment of administration overheads?
(A) Direct wages
(B) Works cost
(C) Conversion cost
(D) Sales value
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Answer:
(A) Direct Wages
Explanation:
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The correct answer is OPTION A: Direct Wages.
- Overhead apportionment is the equitable distribution of overheads among many cost centers.
- When many cost centers share indirect costs, they must be evenly allocated.
- For example, a department can be allocated general repair and maintenance funds, but they must be dispersed across the department's many pieces of equipment (Cost Centres).
- If the department only makes one product, that product may receive all of the department's repair and maintenance.
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