Basis For Apportionment of Expenses - SS3 Accounting Lesson Note

The basis for apportionment of expenses refers to the method used to allocate or distribute shared expenses among different departments or cost centers in a business. The goal is to ensure that each department or cost center is charged only for the expenses that are directly related to its operations.

The most common basis for apportionment of expenses is the usage or consumption of resources. For example, if a business has multiple departments and they all use electricity, the electricity bill can be apportioned based on the amount of electricity used by each department.

Another basis for apportionment of expenses is the number of employees in each department. If a business has multiple departments and they all use a shared resource such as a meeting room, the cost of maintaining the meeting room can be apportioned based on the number of employees in each department.

The area or square footage of each department can also be used as a basis for apportionment of expenses. For example, if a business has multiple departments and they all share a common area, the cost of maintaining the common area can be apportioned based on the square footage of each department.

Other factors that can be used as a basis for apportionment of expenses include the number of machines or equipment used by each department, the time spent by each department on a particular project or task, or the revenue generated by each department.