Capital Values: In this method the Capital value of certain assets like machinery and building are used for the apportionment of certain expenses. E.g.: Rent taxes of building, Depreciation of plant. Cost Classification: This is the process of grouping costs according to the common characteristics. Cost may be classified accounting to various characteristics nature, functions, variability etc. Departmentalisation of Overhead Expenses: In a factory there are two types of departments a) production department b) service department Manufacturing processes carried out m the product. A servire donartment provides service for the benefit of other departments. 534 vepartmentalisation of overhead expenses refers to the apportionment of overhead between production and service departments and the reapportionment of all service, department overheads to the production departments Primary distribution of overhead Common expenses have to be apportioned or distributed between production and service department on some equitable basis. The process of distribution is usually known as primary distribution Problem: 1 Primary Distribution Overhead Moorthy Company Ltd is divided into four Department A, B and C are production Departments and D is service Department. The actual costs for a period are as follows Rs. Rs. Rent 5000 Supervision 3000 Repairs to plant 1400 Fire Insurance for stock 800 Depreciation on plant 2800 Power 2000 Employer's liability for insurance 2200 Light 300 Stores overhead 5000 Welfare expenses 4500 The following information available in respect of four departments Dept.D 500 250 Overhead Dept. A Dept.B Dept.C Area (Sq. Meters) 2000 1500 1000 No. of Employees 500 400 350 Direct wages 4000 2500 3000 Value of plant 6000 4800 3600 Value of stock 2000 3000 2000 H.P. Plant 15 10 10 Direct material 1200 800 300 Apportion the costs to the various departments on the most equitable basis. 1500 2400 1000 5 200