Which statement best defines reapportionment in cost accounting?

Which statement best defines reapportionment in cost accounting?

• A. The allocation of direct costs to products
• B. The process of distributing production overheads to service cost centres
• C. The process of transferring all service cost centre overheads to the production cost centres
• D. The allocation of overheads to marketing departments

Answer: (C)

Reapportionment describes reallocating the overhead costs from service departments to the production cost centres that actually use those services. After service department costs are initially allocated or apportioned, the next step is to charge those service costs back to the production areas that benefited, so the full overhead cost ends up attached to the products being costed. This makes product cost more accurate because it reflects the true use of services across departments. So the statement that best defines reapportionment is transferring all service cost centre overheads to the production cost centres. The other ideas describe different allocations (direct costs to products, moving production overheads to service centres, or allocating overheads to marketing) and do not capture this redistribution from service to production areas.

Reapportionment describes reallocating the overhead costs from service departments to the production cost centres that actually use those services. After service department costs are initially allocated or apportioned, the next step is to charge those service costs back to the production areas that benefited, so the full overhead cost ends up attached to the products being costed. This makes product cost more accurate because it reflects the true use of services across departments.

So the statement that best defines reapportionment is transferring all service cost centre overheads to the production cost centres. The other ideas describe different allocations (direct costs to products, moving production overheads to service centres, or allocating overheads to marketing) and do not capture this redistribution from service to production areas.