Give the meaning of apportionment of overhead.

Apportionment of overhead refers to the systematic allocation of indirect expenses (overheads) to various cost centers, departments, or products based on a fair and reasonable basis. Since overheads cannot be directly traced to specific products or departments, they are distributed using pre-determined rates or allocation keys such as machine hours, labor hours, floor space, or usage ratios.

This process ensures accurate costing by:

• Distributing common costs (e.g., rent, utilities, depreciation) fairly.
• Avoiding under/over-costing of products or departments.
• Facilitating management decisions (e.g., pricing, budgeting) based on precise cost data.

For example, factory rent may be apportioned between production and administrative departments based on their floor area usage.