difference between cost allocation and cost apportionment

> Differences between Cost allocation and apportionment Cost allocation means identifying a cost centre and charging its expenses in full. Cost apportionment means allocation of cost to various cost centre using suitable basis **Cost Allocation:** • Allocation means the allotment of whole items of cost to cost centres or cost units. • It deals with the whole items of cost. • Cost is directly allocated to any cost centre or cost units. • Cost is allocated when the cost centre uses whole of the benefits of the expenses. **Cost Apportionment**: • Apportionment means allotment of proportion of items of cost to cost centres or cost units. • It deals with only proportion of items of cost. • It needs a suitable basis for subdivision of cost by cost centres or cost units. Thus it is indirect process of allotment. • Cost is apportioned when cost centres use only a proportion of the benefits of the whole expenses. Regards,

COST ALLOCATION AND COST APPORTIONMENT Cost allocation means identifying a cost centre and charging its expenses in full. Cost apportionment means allocation of cost to various cost centre using suitable basis The nature and expenses in cost allocation are specific and identificable The cost and expenses in cost apportionment are general and common The basis for cost allocation is allocated directly The basis for cost apportionment is allocated indirectly using basis. amount of overhead is charged in full in cost allocation Amount of overhead is charged in proportionable in cost apportionment. Thanks

Hii Allocation Allocation – expenses assigned based upon a factual relationship to certain classes of income (i.e. business income, rents, royalties, interest, and dividends). If an expense is incurred as a result of or incident to or in connection with an activity then, that expense is allocated to the income of that activity to which it is attributable. Apportionment If a deduction is definitely related to a class of gross income that includes income in a statutory grouping and the residual grouping….an “apportionment” is required. Allocation is accomplished by determining, with respect to each deduction, the class of gross income to which the deduction is definitely related and then allocating such deduction to such class of gross income. Expenses have to be allocated and apportioned to statutory classes of income even if that particular class does not have any income. An apportionment must be done in a way that reflects to a reasonable extent the factual relationship between a deduction and the grouping of gross income

Hello Uma The main distinction between allocation and apportionment of overheads are as follows: Allocation 1. The whole item of cost is allocated. 2. It is a simple and direct process. 3. In this case the cost centre enjoys the whole of the benefit of the expenses. Apportionment 1. The proportionate item of cost is charged. 2. It is an indirect process where cost is divided on suitable basis. 3. In this case the cost centre enjoys a proportion of the benefit of the whole expenses.

Hiiii uma, Differences b/w Cost allocation and apportionment ------------------------------------------------- **Allocation:** • Allocation means the allotment of whole items of cost to cost centres or cost units. • It deals with the whole items of cost. • Cost is directly allocated to any cost centre or cost units. • Cost is allocated when the cost centre uses whole of the benefits of the expenses. **Apportionment:** • Apportionment means allotment of proportion of items of cost to cost centres or cost units. • It deals with only proportion of items of cost. • It needs a suitable basis for subdivision of cost by cost centres or cost units. Thus it is indirect process of allotment. • Cost is apportioned when cost centres use only a proportion of the benefits of the whole expenses. Regards,

Hii Uma Allocation vs Apportionment Allocation and apportionment are methods that are used to assign various costs to their respective cost centers. Allocation can only be used when the entire expense is directly related to one department and apportionment is used when proportions of the expense arise from a number of different departments. The article offers a clear explanation of these terms with examples and points out how these methods of assigning costs are different to each other. Allocation and apportionment are methods that are used to divide up costs among various cost centers depending on which department or cost center each cost or portions of each cost belong. The major difference between allocation and apportionment methods are that allocation is used when the overhead can be directly related to one department and cost center, and apportionment is used when the overhead arises from a number of departments. In allocation, the entire amount of the cost will be allocated to one department, and in apportionment proportions of the costs will be divided among their respective cost centers. Allocation is much easier and simpler to do as the expense will directly be related to one cost center. Apportionment can, however, be quite tricky as the percentage of the cost that needs to be assigned to each department may be difficult to decide.