In reapportionment, where are service cost centre overheads transferred?

• A. They remain in service cost centres
• B. They are allocated to sales units
• C. They are transferred to production cost centres
• D. They are transferred to marketing cost centres

Answer: (C)

In reapportionment, service department costs are redistributed to the departments that actually use those services. For manufacturing costing, that means moving the overheads from service cost centres to production cost centres, so the production costs (and ultimately the cost of goods produced) reflect all the resources consumed in making the product. The transfer uses an appropriate usage driver (like machine hours, floor space, or headcount) to allocate the service costs to production areas. It’s not left in the service centres, and it’s not typically charged directly to marketing or sales in this framework.