In departmental accounting, various operational overheads are shared among departments using equitable criteria. Match each expense item listed on the left with its standard basis of apportionment on the right.
- Supervision expensesNumber of employees in each department
- Heating and air conditioning expensesCubic capacity (volume of space) of each department
- Depreciation of plant and machineryBook value of machinery in each department
- Delivery van expensesSales turnover of each department
Answer
Supervision expenses match with Number of employees in each department; Heating and air conditioning expenses match with Cubic capacity (volume of space) of each department; Depreciation of plant and machinery matches with Book value of machinery in each department; Delivery van expenses match with Sales turnover of each department.
Each overhead expense in departmental accounting must be allocated according to its direct cost driver: supervision expenses are apportioned by employee headcount; heating and air conditioning by cubic volume of space; plant depreciation by asset book value; and delivery van expenses by departmental sales turnover.
Step-by-Step Solution
Key Concept
Bases of Apportionment for Departmental Indirect Expenses