Most of the time overheads are not caused by a single product or a cost center and are jointly incurred on one or more product or by one or more departments. Therefore, we cannot charge such overheads specifically to each department or simply they cannot be allocated.
Even though we cannot charge some kinds overheads specifically, it does not mean that they will not be form part of production cost. In order to overcome such difficulty, we divide the overheads on some justifiable basis. And as overheads are distributed on the basis of some arbitrary basis, we call such distribution or division as apportionment.
The difference between allocation and apportionment is evident from the above discussion i.e. to allocate overhead we do not need any secondary way of division as we already know how much has been incurred in relation to a product or cost center. But overheads for which we do not exactly know how much has been incurred in different products or cost centers, we just apportion them using understandable basis.
There is no such thing as direct apportionment. People use such terms loosely to mean other meanings. For example, direct apportionment might be used for allocation. And indirect allocation might be used for apportionment. It is recommended that such terms should not be used as these can cause confusions.
