Overhead Apportionment Allocates Indirect Costs

Steps:

• Identify overhead as indirect costs like utilities that benefit multiple departments without direct traceability.
• Recognize apportionment as the method to distribute these common costs fairly using bases like floor space or machine hours.
• Differentiate from direct costing: specific costs (e.g., materials) are assigned precisely, not shared.
• Confirm purpose: ensures production departments bear appropriate shares for accurate product costing.

Why C is correct:

• Overhead apportionment shares common indirect costs to production departments, as defined in cost accounting to enable full absorption costing of products.

Why the others are wrong:

• A: Specific costs are directly traced to departments, bypassing apportionment.
• B: Specific costs to service departments follow direct assignment, not sharing.
• D: Common costs are apportioned primarily to production; service departments receive re-apportionments secondarily.

Final answer: C