Because no production cost units pass through the service cost centers, it is necessary to apportion the service department costs, to the production cost centers so that all production costs (including those for the servicing departments) are absorbed into production. Typical basis for secondary apportionment, i.e. the apportionment of service costs to production departments are given below:

Service Department Possible basis of Apportionment to
  Production Cost Centres
Maintenance Maintenance Labour Hours
  Maintenance Wages
  Plant value
Stores Number of Requisitions
  Weight of Materials issued
Inspection Number of production employees per cost centre
  Number of Inspection Tickets
  Number of Jobs
Production Control No of Production Employees per cost centre
  No of jobs
Power General Generation Metered Usage
  Notional Capacity
  Technical Estimate
Personnel Department No of Employees per Department


The basis chosen should be one that is judged to be the most equitable way of sharing the service department ‘s costs over the departments which use the service. This may mean that a particular and unique basis of apportionment may have to be derived. It must reflect the use made of the services provided.

Wherever possible, service department costs should be charged directly, i.e. allocated. An example

of this would be maintenance wages and materials. When a maintenance job is done for a department, the wages and materials used would be charged directly to the department concerned. In this way only unallocated service department costs need to be apportioned.