# Allocation vs Apportionment
These are the two methods used in the Primary Distribution of overheads.
## Allocation
- When the cost of a cost centre can be traced or matched directly to it.
- The whole cost is charged to one department — no distribution needed.
- Example: A separate electricity meter fitted outside each department → each department's actual bill is its own cost.
## Apportionment
- When a cost cannot be directly traced to one department — it is a common cost shared by several departments.
- The big common cost is distributed/split over several departments on a suitable basis.
- Example: One common electricity meter for the whole factory → bill must be split among all departments on some basis (e.g., kWh consumed, no. of light points).
## How to Identify a Common Cost?
> Just check if it is paid jointly or paid separately.
> If paid jointly → it is a common cost → needs apportionment.
## What is Re-apportionment?
Overheads are recovered (absorbed) on the basis of units produced or hours worked for production. Since service departments don't produce goods, their total cost (direct + indirect) must be redistributed/transferred to production departments for final recovery. This redistribution is called re-apportionment (or Secondary Distribution).
## The Five-Stage Flow of Overheads
```
Estimate → Allocate → Apportion → Re-apportion → Absorb
OH OH OH OH OH
```