# Bases of Apportionment for Common Overheads
Every common overhead must be apportioned on a logical, cause-and-effect basis. The key is to pick a basis that closely reflects the benefit received or the consumption by each department.
## Standard Bases (Must Memorise)
| Overhead Cost | Basis of Apportionment |
|---|---|
| Rent, Building expenses, Lighting, Heating, AC, Fire-precaution service | Floor area or volume of department |
| Perquisites, Labour-related expenses, Supervision, Time-keeping | No. of workers |
| PF / ESI / Holiday Pay, Workers' Compensation | Direct wages |
| General overheads | Direct labour / Direct wages |
| Depreciation of plant/machine, Repairs of plant, Insurance of stock/plant | Capital value of machine |
| Lighting expenses | No. of light points or meter readings |
| Material handling, Stores overheads | Weight / Value / Volume of material handled |
| Electric power for machines | If machine hours are given → use HP × Machine Hours. If only hours are given (not machine hours) → use Horse Power alone. |
## How to Decide the Right Basis
1. **Identify what causes the cost.** Is it driven by space, people, money value, or movement?
2. Pick the basis closest to that driver.
3. If two bases seem possible, prefer the more direct one (e.g., kWh consumed > floor area, for power).
## Power Cost — A Common Tricky One
- Power = Horsepower × Hours
- If question gives machine hours → use HP × Machine Hours (more accurate).
- If question gives only HP and no machine hours → use HP alone as the basis.