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Difficulty: EasyAllocation and Apportionment of Expenses among Departments

Match each departmental expense listed on the left with its most appropriate basis of apportionment on the right.

  • Rent and RatesFloor area occupied
  • Canteen ExpensesNumber of employees
  • Depreciation of MachineryCost or value of machinery
  • Lighting and HeatingNumber of light points or floor area

Answer

Rent and Rates matches Floor area occupied; Canteen Expenses matches Number of employees; Depreciation of Machinery matches Cost or value of machinery; Lighting and Heating matches Number of light points or floor area.
Each departmental expense is paired with its direct cost driver: Rent and Rates with floor area occupied, Canteen Expenses with number of employees, Depreciation of Machinery with asset value, and Lighting and Heating with number of light points or floor area.

Step-by-Step Solution

1
Determine the cost driver for building occupancy expenses.
Rent and Rates is driven by physical space occupied, matching Floor area occupied.
Property overheads vary directly with the surface space assigned to each department.
2
Determine the cost driver for personnel welfare expenses.
Canteen Expenses is driven by staff headcount, matching Number of employees.
Staff catering and welfare costs scale in proportion to the number of workers.
3
Determine the cost driver for fixed asset usage.
Depreciation of Machinery is driven by asset valuation, matching Cost or value of machinery.
Departments with higher investment in equipment absorb a proportionately higher share of depreciation.
4
Determine the cost driver for lighting overheads.
Lighting and Heating is driven by light fixtures or space, matching Number of light points or floor area.
Illumination costs depend on the number of bulb fittings or space heated.

Key Concept

Selection of equitable bases for apportioning indirect departmental expenses
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Topics

Allocation and Apportionment of Expenses among Departments

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