Allocation Of Expenses In Departmental Accounting

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The expenses which can be specially incurred for a particular departments like salary to salesman, can be charged directly to the department, but the expenses which could not be allocated precisely to a particular department may be divided among the different departments are as follows:

1. Sales Of Each Department
* Salesman's commission
* Discount allowed
* Bad debts
* Carriage Outwards
* Advertisement
* Packing expenses
* Provision for discount on debtors
* Traveling salesman's salary and commission

2. Purchase Of Each Department
* Discount received
* Provision for discount on creditors
* Carriage Inward
* Freight
* Duty

3. Area Of Floor Space Of Each Department
* Rent
* Rates and taxes
* Repair and maintenance Of building
* Insurance on building
* Air conditioning expenses
* Heating

4. Value Of Assets In Each Department
* Depreciation Of Machinery
* Repairs and maintenance of plant
* Insurance premium

5. Number Of Workers
* Workmen's compensation insurance
* Canteen expenses
* Labor welfare expenses
* Time keeping
* Personnel office
* Supervision

6. Direct Wages
* Compensation to workers
* Holiday pay
* Provident fund contribution
* Group insurance premium

7. Number Of Light Points
* Lighting expenses

8. Horse Power Of Machine And /Or Production Hours
* Electric Power

9. Time Devoted By Him For Each Department
* Work manager's salary

Related Topics
Concept And Objectives Of Departmental Accounting
Accounting Procedure In Departmental Accounts
Difference Between Branch And Department
Journal Entry For Inter-departmental Transfers


  1. In the statement above, the allocation of Repairs and Maintenance of plant is based on the area of floor space of each department. I just want to clarify, what if the repairs is made to the specific department? For example, if we are running in a nursing facility and there is repairs made to machine that is specifically identified as part of the Nursing department. Instead of recording the said repair as part of the Plant department's cost and later allocate to each department, can we record that directly as part of the Nursing department's expense since it is directly attributable to this department?


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