What are the differences between Allocation and Apportionment?

Allocation:

  • Allocation means the allotment of whole items of cost to cost centres or cost units.
  • It deals with the whole items of cost.
  • Cost is directly allocated to any cost centre or cost units.
  • Cost is allocated when the cost centre uses whole of the benefits of the expenses.

Apportionment:

  • Apportionment means allotment of proportion of items of cost to cost centres or cost units.
  • It deals with only proportion of items of cost.
  • It needs a suitable basis for subdivision of cost by cost centres or cost units. Thus it is indirect process of allotment.
  • Cost is apportioned when cost centres use only a proportion of the benefits of the whole expenses.