# Types of Department
In a factory, departments are broadly classified into two types based on whether they actually produce the goods or support production.
## 1. Production Department (P)
Departments of the company which are actually involved or engaged in production. The product physically passes through these departments and undergoes a change in form/shape.
- Examples: Machining Dept., Assembly Dept., Finishing Dept.
## 2. Service Department (S)
Departments that do not produce goods themselves but help the production departments in carrying on production smoothly.
- Examples: Canteen, Godown/Stores, R&D, Maintenance, Time-keeping, Power House.
## Why This Distinction Matters
Because service departments don't produce output, their costs cannot be directly recovered from units. So:
1. First, overheads of all departments (both P and S) are collected — Primary Distribution.
2. Then, the total cost of service departments is transferred to production departments — Secondary Distribution / Re-apportionment.
3. Finally, the total accumulated cost in production departments is recovered through absorption on units/hours.