# Primary Distribution (Primary Allocation) of Overheads
This is the first stage of distribution where each item of overhead is either allocated (whole) or apportioned (split on a basis) to both production and service departments.
## Format of Primary Distribution Statement
| Items of Cost | Basis | Total Cost | Prod₁ | Prod₂ | Serv₁ | Serv₂ |
|---|---|---|---|---|---|---|
| Direct material | — | xx | (working note) | xx | xx | |
| Direct labour | — | xx | xx | xx | ||
| Direct expenses | — | xx | xx | xx | ||
| Stores expenses | 2:3:4:5 | xx | xx | xx | xx | xx |
| Accounts dept. | 1:2:3:4 | xx | xx | xx | xx | xx |
| Canteen | 1:3:2:1 | xx | xx | xx | xx | xx |
## ⚠️ Two Important Notes on Direct Costs
(i) When Direct Material / Direct Labour / Direct Expenses are given for ALL departments (both production and service):
→ DO NOT write Direct Material/Labour/Expenses in Production department row of primary distribution.
(Reason: For production departments, these are already direct costs of products and get charged directly to the job/product, not via the overhead route. Only the service-department portion becomes overhead.)
(ii) When Direct Material / Labour / Expenses are given only for Production departments:
→ Write them in the production department columns in the primary distribution.
## Why this matters
- Service departments don't make products, so any "direct" cost incurred by them is treated as overhead (since it cannot be traced to a product).
- Production departments already attach their direct costs to products — including them again as overhead would double-count.