What is proration?

According to the RAE, apportioning means "Proportional distribution of a quantity among several". In general, apportionment consists of the distribution of a monetary amount or cost among one or more individuals over time. It is usually used in the accounting area to be able to distribute the cost that you want.

It can be used in different areas: for extraordinary payments, for the IVA and also
to bills... It all depends on the availability and use of the term we want to do.

The benefits of this term are that it allows a company to be structured in accounting, to know the information that is offered about indirect manufacturing concepts. In addition, the apportionment justifies the different ties that exist between the apartments of the company, as well as knowing the importance of the functions within each of them. In this way, we will see if a department needs more or less cost depending on the number of functions that assume costs.

When we talk about business apportionment, we distinguish two different ones:

  • Primary apportionment: distributes the indirect costs of production among the departments of the company. That is, the expenses related to those due to electricity, water, gas, facilities, machines, etc ... are integrated and divided, according to some parameters, into the different departments.
  • Secondary apportionment: distributes the Indirect costs of production between the indirect costs of different production centers.

Leaving these concepts aside, we must bear in mind that "apportionment" does not only refer to the economy or the workplace. We can also refer to apportionment to refer to when a large or divisible quantity we want to distribute among more people in an equitable way without there being a difference between each of them.

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