In departmental accounting, indirect expenses are apportioned to departments using equitable bases of allocation. Match each overhead expense on the left with the most appropriate basis of apportionment on the right.
- Rent and rates of business premisesFloor space occupied by each department
- Canteen and staff welfare expensesNumber of employees in each department
- Depreciation of plant and machineryCapital value of machinery in each department
- Heating and air conditioning costsCubic capacity of departmental spaces
Answer
Rent and rates matches floor space occupied; Canteen and staff welfare matches number of employees; Depreciation of plant and machinery matches capital value of machinery; Heating and air conditioning matches cubic capacity.
Each expense is matched with its logical cost driver according to standard accounting principles: premises costs correspond to floor area, personnel costs correspond to headcount, equipment depreciation corresponds to asset valuation, and volume-based climate costs correspond to cubic capacity.
Step-by-Step Solution
Key Concept
Apportionment of Indirect Expenses on Equitable Bases in Departmental Accounts