Q.A factory has three production departments — A, B and C — and one service department, D. The following data is available for a period: Floor Area (sq. ft.): A 2,000; B 1,500; C 1,000; D 500 (Total 5,000)
Number of Employees: A 40; B 30; C 20; D 10 (Total 100)
Value of Machinery (₹): A 2,50,000; B 1,50,000; C 75,000; D 25,000 (Total 5,00,000)
Horse Power of Machines: A 30; B 20; C 10; D Nil (Total 60) The following Overhead items were incurred during the period:
Rent and Rates ₹10,000 (basis: Floor Area)
Lighting and Heating ₹4,000 (basis: Floor Area)
Canteen Expenses ₹3,000 (basis: Number of Employees)
Supervisor's Salary ₹6,000 (specific to Department A only — allocate wholly)
Power ₹6,000 (basis: Horse Power of Machines)
Depreciation of Machinery ₹10,000 (basis: Value of Machinery) Prepare a Primary Overhead Distribution Summary showing the share of each Overhead item charged to each department, and the Total Overhead of each department.

Each Overhead item is divided among the four departments strictly according to its own stated basis — Floor Area, Number of Employees, Horse Power or Value of Machinery — except the Supervisor's Salary, which goes wholly to Department A because it is directly traceable there.

Each Overhead item is apportioned in the ratio of the relevant basis figures across the four departments (Supervisor's Salary is Allocated, not apportioned, since it is traceable wholly to Department A):

Rent and Rates ₹10,000 — Floor Area ratio 2,000:1,500:1,000:500 (= 4:3:2:1 of 5,000 total):

A = 10,000 × 2,000/5,000 = ₹4,000; B = 10,000 × 1,500/5,000 = ₹3,000; C = 10,000 × 1,000/5,000 = ₹2,000; D = 10,000 × 500/5,000 = ₹1,000.

Lighting and Heating ₹4,000 — same Floor Area ratio:

A = ₹1,600; B = ₹1,200; C = ₹800; D = ₹400.

Canteen Expenses ₹3,000 — Employees ratio 40:30:20:10 (of 100 total):

A = 3,000 × 40/100 = ₹1,200; B = ₹900; C = ₹600; D = ₹300.

Supervisor's Salary ₹6,000 — Allocation, wholly to Department A:

A = ₹6,000; B = D = C = ₹0.

Power ₹6,000 — Horse Power ratio 30:20:10:0 (of 60 total; D has no machines):

A = 6,000 × 30/60 = ₹3,000; B = 6,000 × 20/60 = ₹2,000; C = 6,000 × 10/60 = ₹1,000; D = ₹0.

Depreciation of Machinery ₹10,000 — Value of Machinery ratio 2,50,000:1,50,000:75,000:25,000 (of 5,00,000 total, i.e. 50%:30%:15%:5%):

A = 10,000 × 50% = ₹5,000; B = 10,000 × 30% = ₹3,000; C = 10,000 × 15% = ₹1,500; D = 10,000 × 5% = ₹500.

A frequent error is apportioning the Supervisor's Salary across all departments using the Employees basis (mistaking it for a shared cost) instead of recognising it as Allocation, wholly to Department A, since the question states it is specific to that department only. Another common mistake is apportioning Power using the Floor Area ratio instead of the …