Cost apportionment is the method of charging a proportion of a cost to a cost centre or cost unit because these cost centres or units share in incurring those costs without directly incurring them. A basis of apportionment is always required.
Cost apportionment, a vital concept in accounting, involves the distribution of costs across various departments, products, or periods based on specific criteria. This ensures that expenses are accurately allocated, enabling precise financial tracking and reporting.
Reciprocal Costs involve the apportionment of costs between service cost centers and production cost centers in a mutually interactive manner. This ensures that the costs of support services are accurately allocated to the production activities, allowing for precise cost control and financial analysis.
