Primary Distribution of Overhead
Primary Distribution is the allocation or appointment of different items of overhead to both production and service departments on suitable basis. There is no partiality between production and service department in making primary distribution.
The following points should be kept in mind in the case of primary distribution.
1. The basis for allocation and apportionment should be equitable and practicable.
2. Charges are to be made to different departments in relation to benefits received.
3. The method and basis for allocation and apportionment should not be time consuming and costly.
Bases for Primary Distribution of Overheads
The following bases are commonly used by many organizations for distribution of overhead.