Partial Apportionment
Partial apportionment is an accounting method used for allocating certain costs across multiple entities. Partial apportionment is used when allocating costs between two entities (or groups) that must share certain expenses. The method is used to ensure that each individual entity pays a fair and proportionate share of the expenses.
To illustrate partial apportionment, consider a company that needs to allocate the cost of a new piece of equipment between its two departments – Business Development and Sales. Business Development will use the equipment 65% of the time, while Sales will use the equipment 35% of the time. In this case, partial apportionment would be used to divide the cost of the equipment so that Business Development pays for 65% of the cost and Sales pays for 35% of the cost.
Partial apportionment is a commonly used method of cost allocation because it takes into account the usage of each entity. If one entity is using the equipment more than the other, its expenses will be higher. Similarly, if the usage of one entity is low, its costs will be lower.
Partial apportionment is a flexible and adaptable method of cost allocation because it can be used in almost any situation where costs are shared between two entities or groups. However, the method can become complex when there are multiple entities sharing costs. In such cases, a more comprehensive approach to cost allocation may need to be employed.
Partial apportionment is a cost-effective and reliable way to ensure cost-sharing between entities. The method ensures that each entity pays a proportionate share of the costs, and provides an equitable solution to cost-sharing. In addition, partial apportionment is simple to use and can be adapted to various cost-sharing scenarios. When it comes to cost-sharing, partial apportionment is often the preferred option due to its simplicity and reliability.
