Basis of allocation: Departmental Accounting

Different basis of allocation

Sl No.CostBasis of allocation
1Interest(i) Total Capital Employed in in the Department
(ii) Square feet of the area occupied
(iii) Ratio to Sales
2Insurance(i) Square feet of the area occupied.
(ii) The total value of each asset
3Taxes(i) Ratio to sales
(ii) Basis of tax
4Rent(i) Ratio to sales
(ii) Square feet of area occupied
(iii) No of hours of operation
5Depreciation(i) Square feet of area occupied (building)
(ii) Value of the asset
(iii) Life of the asset
6Telephone(i) Dept. Metered Usage
(ii) No. of extension sanctioned
(iii) Ratio to sales
7Employee’s Benefit(i) No. of employees
 (ii) Refer to payroll record
8Advertisement(i) Ratio to sales
9Light & Power(i) No. of light/power points
 (ii) Cubic feet of area occupied
(iii) No. of hours dept. operate
(iv) Ratio to sales

The above-mentioned basis of allocation are some of the basis recommended but a management may adopt altogether a different base for allocation of indirect cost to the different department.

Amit Kumar
Amit Kumarhttp:////hmhelp.in
Hii! Welcome to My digital home, I am Amit – an almost no-code generalist, helping businesses with their online presence using WordPress and other tools and simplifying some of their operations with ideas and automation. A psychology and philosophy geek by interest and a graduate in Hospitality Management. I founded hmhelp during college, which got me into WordPress. I am a highly motivated and results-oriented professional with a proven track record of success in the hospitality industry. I’m also a Digital Marketing Enthusiast with significant academic and practical experience managing digital content across multiple platforms. Skilled at SEO optimization, developing digital content for social media platforms, I offer extensive knowledge of multiple software programs, strong attention to detail, and extraordinary communication skills. If you are interested in talking about any of the topics I have mentioned on my website, you are in the right place. You can contact me or learn more about what I do. You can also connect with me on social networks.

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