no of workers in each department is not. used as a basis of allocation of
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Answer:
Apportionment of cost is the method of apportioning the common cost to the other departments. Staff welfare cost should be apportioned in the ratio of number of employees working in each department.
Answer:
The primary methods of allocating overhead in manufacturing firms are as follows:
()Direct Allocation:
Overheads are allocated to various departments directly based on their expenses. Overtime premiums for specific department employees, power (when separate metres are available), jobbing repairs, and so on are examples.
(ii) Direct/Machine Labor Hours:
The overhead expenses are distributed to various departments based on the total number of labour or machine hours worked in each department. The vast majority of general overhead items are allocated on this basis.
(iii) Value of Materials Passing Through Cost Centres:
This basis is used for material-related expenses such as material handling costs.
(iv) Direct Wages:
Expenses are distributed among departments based on the ratio of direct wage bills of the various departments. This method is only used for expenses that are booked with wage amounts, such as workers' insurance, provident fund contributions, workers' compensation, and so on.
(v) Number of Employees:
The total number of employees in each department is used to allocate overhead expenses among departments. This method is used when the expenditure is determined more by the number of employees than by the wage bill or the number of labour hours. This method is used to allocate certain expenses such as welfare and recreation expenses, medical expenses, time keeping, supervision, and so on.
(vi) Floor Area of Departments:
This basis is used to allocate certain expenses such as lighting and heating, rent, rates, taxes, building maintenance, air conditioning, fire precaution services, and so on.
(vii) Capital Values:
The capital values of certain assets, such as machinery and buildings, are used as the basis for allocating certain expenses in this method.
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