ECONOMICS

Detailed explanation-1: -This basis is adopted for the apportionment of certain expenses like lighting and heating, rent, rates, taxes, maintenance on building, air conditioning, fire precaution services etc.

Detailed explanation-2: -Rent and business rates, for example, are sometimes paid by individual cost centres, and floor space is also used as a basis for apportionment to share costs between relevant cost centres. The costs are proportionately assigned to different departments when the overhead belongs to various departments.

Detailed explanation-3: -The basis used for apportionment of costs is the number of cost centres when the expenses are to be shared equitably between them. This happens when an overhead can not be assigned directly to one specific cost centre.