ASSIGNMENT

UNIT 3: Overheads
1. Differentiate between allocation and apportionment.

Answers:

Definition: Allocation involves allotment of overhead incurred for a particular cost centre to that specific
cost centre. While allocating the cost centre should be responsible for incurring such costs and the
amount of overhead to be allotted should be specific.

Definition: Charging a fair share of overhead to each cost centre is termed as apportionment. It can be
defined as “the allotment to two or more cost centres of proportions of common items of cost on
estimated basis of benefit received”.

Allocation Apportionment

It deals with whole items of cost. It deals with ‘parts or portions’ of items of cost.

It means directly attributing the items of It takes recourse to the indirect method of equitable
overheads to cost centres and units. subdivision of items of cost.

It does not need any basis. It is mainly dependent on suitable ‘Bases’ for
subdivision of items of overhead.
 2. Explain the types of overheads based on function.

Answers:

Administration overheads: The administration overheads constitute the costs incurred in formulating
the policy, organizing, directing and controlling the operation of an undertaking. It is defined as “the cost
of formulating the policy, directing the organization and controlling the operations of an undertaking
which is not related directly to production, selling, distribution, research or development activity or
function”. Thus, the administration overhead is incurred in connection with management and
administration of an enterprise. The administration costs are general in nature and the benefit goes to
the firm as a whole. The administration overhead is classified, subject to codification, and collected as
done in the case of manufacturing overhead. The administrative overheads are collected understanding
order numbers or cost accounts numbers allocated and apportioned to departments on suitable basis.
For effective control of administration overhead the amount of cost is departmentalized among general
office, secretarial department, legal department, accounts department, personnel department, etc.

Selling Overhead: refers to all costs of seeking to create and stimulate demand or of securing orders
e.g., sales office expenses, advertisement, salary of sales manager, traveling expenses, rent of
showroom etc.

Distribution overhead: is the expenses incurred in connection with execution of an order. It begins
with making the packed product available for dispatch and ends with making the reconditioned empty
package, if any, available for reuse. Selling and Distribution expenses are apportioned as per different
functions viz., Transportation, Advertisement and Sale Promotion, Storage and Warehousing, Direct
selling, Credit and Collection etc. Again, each of them can be subdivided into various territories like,
South, North, West etc.

Production Overhead: Also called manufacturing overhead, works overhead and factory overhead. All
the indirect expenses, which are incurred in the factory premises in connection with the production of
any goods and services, are treated as production overhead. Factory rent, rates, lighting, heating, idle
time wages, depreciation of factory, building, plant and machinery, canteen expenses and the like are
some of the examples of production overhead.

Research and Development Overhead: Research overhead is the cost of searching for new products,
new techniques for production or finding new equipment. The development overhead is the cost of
implementation of research result on commercial basis. Cost of raw materials used for research,
salaries and wages of R and D department staff, subscription to books and journals, subscription to
research association, patent feeds and the like are examples of research and development overhead.
 3. What are the formulae for method of absorption of overhead?
Answers:

Absorption means the distribution of the overhead expenses allotted to a particular department over the
units produced in that department. The method and procedure of spreading of overhead expenses to
the cost centres or cost units is known as overhead absorption. It is also referred to as levy, recovery or
application of overhead. The overhead related to suitable bases / factors must be determined in order to
absorb the overhead in costs of jobs, processes or products. This called as overhead Rate. Overhead
Rate = Overhead expenses / Total quantity or value Overhead absorbed in a product = (Overhead rate
*Units of the base contained to the product). Overhead absorbed in a product = (Overhead rate *Units of
the base contained to the product) The criteria for computing overhead absorption rate are:
i. Actual Rate: Actual Overhead rate = (Actual overhead expenses during the period) / (Actual quantity
or value of the products produced during the period).
ii. Predetermined Rate: Predetermined Rate = Budgeted overhead expenses for the period / Budgeted
base for the period. It is determined in advance of the actual production and is computed by dividing the
budgeted overheads by the budgeted production of units (or) by its value for the accounting period.
iii. Moving Average Rate: The rate is a compromise between the actual rate and predetermined rate.
This rate is generally calculated on monthly basis and is computed by dividing the average of the past
twelve or six months average actual overhead by the estimated base for the following months.
iv. Blanket and multiple rates: When a single overhead rate is computed for the factory as a whole, it
is called as single or blanket rate. Blanket Rate = Overhead cost for entire factory / Total quantity of the
base selected. When different rates are computed for each producing department, service department,
cost centre, each product or product line, each production facto and or fixed & variable overhead, then it
is called as multiple rate. Multiple rate = Overhead cost allocated and apportioned to each cost centre /
Corresponding base The blanket rate is used in small concerns where multiple rate is used in large
concerns.
Methods of absorption of overheads
a. Rate Per Unit of Production:
The very simplest direct and easiest method followed by mining and other extractive industries,
foundries, brick laying industries where the output is measured in terms of physical units like number of
items produced, weight, volume etc, is rate per unit of production method.
The rate is calculated as under: Overhead rate = Budgeted overhead expenses / Budgeted production
b. Direct Labour Cost / Direct Wages Method: This method is as like as rate per unit of production
method. But in this budgeted overhead expenses are divided by “Direct Labour Cost” instead of
Budgeted Production. The formula is: Overhead rate = Overhead expenses / Direct Labour Cost. This
method is suitable, only for those concerns where the direct labour constitutes a major proportion of the
total cost of production Where the production and labour employed and types of work performed are
uniform, where the ratio of skilled and unskilled labour is constant, and where there are no variations in
the rates of pay, that is the rates of pay and methods are the same for the majority of the workers in the
concern.
c. Direct Labour Hour or Production Hour Method: From the below given formula this overhead rate
is obtained. Overhead rates = Overhead expenses / Direct labour hours. For example, when overhead
expenses per day is Rs. 40,000 and no. of workers in a day in 5,000 and their working hours is 8 hours
per day, then the overhead rate is = Rs. 40,000 / (5,000 * 8hrs) = 40,000 / 40,000 = Re.1. Re.1 will be
the overhead labour cost. This rate is suitable where labour constitutes the major factor of production
and where the job is labour oriented, it is desired to take into consideration the time factor which is
uniform in nature and the rate may not be affected by the method of wage payment or the grade or the
rate of workers.
d. Machine hour rate: The overhead costs of production may also be absorbed based on machine
hour rate where the cost of machinery forms a greater element of total cost and the use of machinery
influences production as well. Here the overheads mostly relate to the operating of the machines. For
the purpose of computation of machine or a group of similar machines. All expenses, either factory
general expenses or machine running expenses, are, then, allocated or apportioned to the machine cost
centres, on equitable basis. Afterwards, the machine hour rate is calculated by dividing the estimated
total overhead for the machine cost centre by the expected machine hours. The formula is machine
hour rate = Overheads / Machine hours for the period. Machine hour rate can be computed as either
Ordinary machine hour rate or Composite, comprehensive, or blanket rate
e. Direct material cost method: In this method, percentage of factory expenses to value of direct
materials consumed in production is calculated to absorb manufacturing overheads. The formula is
Overheads rate = Budgeted overhead expenses / Budgeted Direct Material cost. This method is suitable
where output is uniform, where the prices of materials are stable and the proportion of overhead to total
cost is significant.
f. Prime cost method: The recovery rate is calculated in this method by dividing the budgeted
overhead expenses by the aggregate of direct material and labour cost of all the products of a cost
centre. The formula to calculate overheads recovery rate = Budgeted overhead expenses / Anticipated
direct material & labour.
g. Sale price method: This method is more suitable for the application of administration, selling and
distribution, research and development, cost to cost of product. It can also be used with advantage for
the preparation of Joint product costs. In this method overhead rate is calculated as under. Overhead
rate = Budgeted overhead expenses / Sale price of the units of production. This method is arbitrary and
recovery made by this method is inequitable because overhead costs have practically no relationship
with the sale price of the products. The apportionment is made on the basis of benefits rather on their
ability to bear the costs.

Overhead absorption is defined as the allotment of overheads to cost units. When the amount of
overheads has been determined on the predetermined basis for each cost center, the next step is to
charge it to production.
This involves taking each cost center and applying its overheads to all the products that pass through
it.
This application of overheads is called absorption, which can be defined as the charging
of overheads to production.
All products, jobs, or services pass through one or more producing cost centers.
Therefore, it becomes necessary to charge overheads to the cost of products, jobs, and processes
according to certain well-established norms and scientific reasoning.
This ensures that the cost pertaining to a cost center must be absorbed as per the set norms.
The process of such charging to or recovering of the overheads in the cost of production is
called overhead absorption.
Overhead Absorption: Explanation
After overheads have been allocated and apportioned to various production departments, the total
overhead cost of a production department comprises the following:
(i) Expenses allocated to the production department (e.g., salary for department head, salary for
departmental foremen, and the cost of indirect materials issued to the department)
(ii) Share of the common expenses apportioned to the production department (e.g., factory rent, salary
of works manager, and factory utility bills)
(iii) Share of the expenses of the personnel department, storehouse, time-keeping department, and
others
The total amount of overhead accumulated for a production department is ultimately charged to the
various cost units of that department.
The distribution of the accumulated overhead cost of a production department amongst its cost units is
known as overhead absorption.
Thus, the absorption of overheads is the function of apportioning overhead costs to individual units,
jobs, production lots, processes, work-orders, or such other convenient cost units.
It is also known as the recovery or application of overhead expenses to cost units.
Steps Involved in Overhead Absorption
There are three essential steps for overhead absorption. These are:
 Determination of absorption bases
 Working out the overhead absorption rate
 Application of overhead to products at this worked-out rate
Methods to Calculate the Overhead Absorption Rate
Various methods exist to calculate overhead absorption. Using these methods, overheads are
recovered, charged to, or absorbed in the factory cost.
1. Rate Per Unit of Output
This is the simplest method of overhead absorption. It refers to the application of overheads based on
the number of units of output manufactured during the period.
This is said to be a direct method of overhead absorption and it is the most convenient method.
The overhead rate can be determined by dividing the total estimated overheads of the cost center or job
by the total estimated units of output.
This method is suitable when the output is uniform in size and quality.
Formula
The overhead absorption rate is calculated as follows:
Overhead absorption rate per unit = Total estimated overheads / Total estimated units of output
Example
If the total units produced are 3,000 and the total production overhead on these units is $15,000, then:
Rate per unit = Amount of production overhead / Number of units produced
Rate per unit = 15,000 / 3,000 = $5
Here, according to this method of overhead absorption, $5 per unit will be taken as factory overhead.
2. Percentage of Direct Material Cost
Under this method, the total direct material cost for all production is taken as the basis of the
overhead absorption rate. This method is suitable when:
 Prices of materials don't fluctuate
 The product is uniform in all respects
 Material cost constitutes a significant proportion of the total cost
Usually, the amount of the overheads and the value of direct materials are determined from past
experience, and the overhead rate is calculated in advance.
The overhead rate is applied to determine the amount of overhead to be charged to a job.
Formula
The rate is calculated as follows:
Overhead absorption rate = (Total estimated overheads / Total direct material cost for all
production ) x 100
Example
If the total production overhead is $15,000 and the cost of direct materials is $60,000, then:
Rate = (15,000 x 100) / 60,000 = 25%
Here, according to this method, the absorption rate will be 25%.
If, for example, the direct materials cost of a product is $2,000, then the overhead of (2,000 x 25) /
100 = $500 per unit will be charged to factory cost.
This methods benefits from its ease and simplicity. It gives reasonably accurate results when the quality
and prices of raw materials do not differ substantially.
Ideally, the quantity and cost of materials in each product are uniform, and processing is also uniform.
3. Percentage of Direct Labor Cost
This method of overhead absorption refers to the application of overheads as a percentage of direct
labor.
This is one of the oldest methods of cost absorption and it is widely regarded as one of the best.
The percentage is obtained by dividing the overhead cost by the amount of direct labor.
The overhead here is applied by multiplying the obtained percentage by the direct labor cost associated
with each product, job, or process.
Under this method, the total direct labor cost forms the basis of the overhead absorption rate. This
method is suitable when:
 The direct labor cost constitutes a major proportion of the total cost
 Labor rates do not fluctuate widely
 Workers have the same efficiency
 Production is uniform
Formula
The rate is calculated as follows:
Overhead absorption rate (%) = (Total estimated overhead / Total estimated direct wages) x 100
Example
If the production overhead is $15,000 and the direct labor cost is $30,000, then:
Rate (%) = (15,000 x 100) / 30,000 = 50%
If a job involves direct wages of $1,000, the overhead to be absorbed amounts to $500 (i.e., 50% of
$1,000).
This method is usually applied in cases where labor is the main factor in production. It is also applied
when the quality, skill, and gender of employees do not differ significantly.
This is a simple, easy, and efficient method of overhead absorption. Salaries, rent, insurance, and taxes
are examples of the overheads that are related to the time factor.
Therefore, using this method for these items yields satisfactory results.
The percentage of direct labor cost method of overhead absorption is also useful due to the simple fact
that the labor rate, as compared to other rates in the elements of cost, is more stable.
Hence, it yields a favorable result.
4. Percentage of Prime Cost
Under this method, prime cost is used as the basis for determining the overhead absorption rate.
We know that both direct materials and direct labor determine the nature of overheads. The prime cost,
comprising direct materials, direct labor, and direct expenses, is significant in every type of organization.
This method is suitable to apply when:
 The products are uniform
 The quantities of direct materials and direct labor are constant
Formula
The rate is calculated as follows:
Overhead absorption rate (%) = (Total estimated overhead / Estimated prime cost) x100
Example
If the production overhead is $1,000 and the prime cost is $4,000, the rate will be:
Rate (%) = (1,000 x 100) / 4,000 = 25%
If the prime cost of a unit is $200, the absorption rate per unit will be $50. That's to say, it will equal
($200 x 25) / 100, which is $50.
This is a simple and easy method. No additional record is required to calculate it. It also considers all
direct costs (i.e. materials, labor, and expenses).
It is best suited to those units of production where overheads depend on both direct materials and direct
labor.
5. Direct Labor Hour Rate
Under this method, total direct labor hours are used to determine the overhead absorption rate.
This method is suitable for labor-intensive industries in which manual labor is a dominant factor in
production.
Formula
The rate is calculated as follows:
Overhead absorption rate per direct labor hour = Total estimated overheads / Total estimated
direct labor hours for all production
Example
If the overheads amount to $4,000 and labor spent comes to 20,000 hours, then:
Rate = 4,000 / 20,000 = $0.2 per hour
If 25 hours are spent on a job, then the absorption on the job will be of $0.2 x 25 hours (i.e., $5). This
method should be applied when labor is the main factor of production.
6. Machine Hour Rate
Total machine hours are used to determine the overhead absorption rate in this method. This is an
excellent method for the absorption of overhead costs in industries where much of the work is
performed with the help of machines.
Formula
The rate is calculated as follows:
Overhead rate per machine hour = Total estimated overhead / Total estimated machine hours for
all production
Example
A factory uses 10 machines, each of which runs for 20 hours per day. Also, the total production
overhead comes to $20,000. In this case, the machine hour rate is calculated as follows:
Machine hour rate = 20,000 / (10 x 20) = $200
Importantly, machine hour rate is always calculated per machine (i.e., not for all machines). Therefore,
the correct formula and calculation are as follows:
Machine hour rate = Production overhead of one machine / Machine hour of one machine
= (20,000 / 10) / 20
= $2,000 / 20 = $10 per hour per machine
 4. Explain the method of re-apportionment.

Answers:

Methods of Re-apportionment:
a. Direct Redistribution Method: The cost of service departments are directly apportioned to production
departments without taking into consideration any service from one service department to another
service department. Thus, proper apportionment cannot be done and the production departments may
either be overcharged or undercharged. The share of each service department cannot be ascertained
accurately for control purposes.

b. Step Method: The cost of most serviceable department is first apportioned to other service
departments and production departments. The next service department is taken up, its cost is
apportioned, and this process goes on until the cost of the last service department is apportioned. Thus,
the cost of the last service department is apportioned only to the production departments.

c. Reciprocal Service Method: In order to avoid the limitation of Step Method, this method is adopted.
This method recognized the fact that if two departments provide service to each other, each department
should be charged for the cost of services rendered by the order. The inter-service departmental
transfer can be dealt using simultaneous equation method, repeated distribution method or trial and
error method.

Service departments may exist to provide services of various kinds to other departments. For
example, personnel, maintenance, boiler house, pump house, power generation departments are
service departments which provide service to the production and other service centres. In some
instances the service departments may even consume part of their services themselves.
It is common that in all organizations the overheads will be incurred by both production and s ervice
departments. Hence, in the first step, all the overhead costs should be allocated or apportioned to
the production and service departments on some equitable basis. This is called ‘primary
distribution’ of overheads.

The service departments render service (benefit) to the production departments. In ascertainment
of production departments cost the expenses of service departments are to be reapportioned
amongst production departments only. This process of redistribution of service departments cost to
production departments is called ‘secondary distribution’ of overheads.
It means re-distribution of service cost centres’ overheads to production cost centres on some
suitable basis/method because, the overheads are finally recovered through the production cost
centres only.
The methods generally used in allocation of service department costs are explained as
follows:
(a) Direct Method:
Under this method, the service department’s total costs are directly allocated to production
departments. This method used when a direct percentage of use of service departments by
production departments is known. This method ignores any services rendered by one service
department to another.
(b) Step-Down Method:
This method recognizes the services provided to other service departments using a sequence of
reallocations in which service department costs are allocated in turn to production departments and
to other service departments. But no further costs are allocated to a service department once its
costs have been allocated.
The basic assumption of this method is that when one service department’s costs are apportioned,
that particular department is then eliminated from any apportionment of the other service
departments.
This method ignores the concept of ‘reciprocal services’. Thus, this method ignores the complexity
of situations in which two or more service department’s simultaneously provide services to each
other, as well as to production departments. This method is also called as ‘eliminatio n method’.
Illustration 1: Self-help Ltd. has genests and produces its own power. Data for power Costs
are as follows:

During the month of May costs for generating power amounted to Rs. 9,300; of this Rs. 2,500 was
considered to be fixed cost. Service Department ‘X’ renders service to A, B and Y in the ratio
13:6:1, while Service Department ‘Y’ renders service to A and B in the ratio 31:3. Given that the
direct labour hours in departments A and B are 1,650 hours and 2,175 hours respectively, find the
power cost per labour hour in each of these two departments.
Solution:

(c) Repeated Distribution Method:

This method takes into account the reciprocal services of services departments. Under this method
the primary distribution of overheads is made to production and service departments on regular
basis.
Then, service department costs are repeatedly allocated in the specified percentages. This
process continues until all the service costs have been fully transferred into the production
departments. This is a laborious method and a computer can be used in the calculations. This
method is also known as ‘continuous allotment’ method.
Illustration 2: Modern Manufacturers Ltd. Have three production Departments P1, P2 and
P3 and two Service Departments S1 and S2, the details pertaining to which are as under:
Find out the total cost of Product X which is processed for manufacture in Departments P1, P2, and
P3 for 4, 5 and 3 hours respectively, given that its direct material cost is Rs. 50 and direct labour
cost Rs. 30.
Solution:

(d) Simultaneous Equations Method:

Under this method, mathematical simultaneous equations are formulated and then equations are
solved. This method is also called ‘algebraic’ method.
Illustration 3: The Space Production Company manufactures components for radio and television
satellites using two service departments and two production departments.
The interdepartmental relationships and estimated overhead costs are given below:
Percentage of services provided to:

Required:
(i) Using the direct method, show the amount of Scheduling Department costs to be allocated to
Assembly Department.
(ii) Repeat (i) using the step method and allocating maintenance first.
(iii) Repeat (i) using the Reciprocal Method (method of Simultaneous equations may be used.)
Solution:
(i) Direct method – Scheduling department costs to be allocated to Assembly department is 30%
of Rs. 4,00,000 = Rs. 1,20,000

(e) Reciprocal Method: Let ‘M’ be the overheads of Maintenance Department and ‘S’ be the
overheads of Scheduling Department
M = 7,50,000 + 0.2 S…………………….. (1)
S = 4,00,000 + 0.1 M……………………. (2)
By substituting equation (2) in equation (1)
M = 7,50,000 + 0.2 (4,00,000 + 0.1 M)]
M = 7,50,000 + 80,000 + 0.02 M
M – 0.02 M = 7,50,000 + 80,000
0.98 M = 8,30,000
M = 8,30,000/0.98
M = Rs. 8,46,939
S = 4,00,000 + (0.1 x 8,46,939)
= 4,00,000 + 84,694
= Rs. 4,84,694
 5. List down the methods of apportionment.

Answers:

Methods of apportionment

a. Service or use method: Under this method the service or benefit rendered to different departments
is the basis of apportionment of overhead. The service rendered to various departments can be
measured and it is fair and equitable to use, since benefit received is the criterion for apportionment. For
example rent charges are apportioned on “area occupied” basis.

b. Analysis or survey method: For some items of overhead it may not be possible to measure the
proportion of benefit derived. In such a case a survey or analysis is made to reveal the extent of
overheads to be charged to different departments. Examples are foreman’s salary, power expenses
when meters are not maintained separately, etc.

c. Ability to pay method: Under this method overhead costs are apportioned on the basis of capacity
to bear, i.e., sales volume or profits of different departments. Higher the profit/ sales value of the job
more is the
overhead charged. This method is generally not used since it is considered inequitable. It penalizes the
efficient and profitable units of a business to the advantage of the inefficient ones. d. Efficiency or
incentive method: This is a scientific method of apportionment. Under this method the output is
budgeted and efficiency is measured by comparing actual with budgets. If the actual output exceeds the
budget the incidence of overhead cost is reduced and the cost per unit is lowered. If the targets are not
achieved the unit cost goes up revealing the inefficiency of the department.

Methods of Apportionment
Following each decennial census, the seats of the House of Representatives are reapportioned among
the states according to their population. There are several different methods of apportionment, listed
below, each of which allocates seats in a slightly different way.

The Hamilton/Vinton Method

The Hamilton/Vinton Method sets the divisor as the proportion of the total population per house seat.
After each state's population is divided by the divisor, the whole number of the quotient is kept and the
fraction dropped. This will result in surplus house seats. The first surplus seat is assigned to the state
with the largest fraction after the original division. The next is assigned to the state with the second-
largest fraction and so on.For example:
If a country had 4 states, and a 20-seat House of Representatives...
2560 + 3315 + 995 + 5012 = 11882
11882 ⁄ 20 = 594.1

State Population Quotient First Left Over Seats

Allocation of Decimal Apportioned
Seats
A 2560 2560 ⁄ 594.1 = 4 .31 4
4.31
B 3315 3315 ⁄ 594.1 = 5 .58 6
5.58
C 995 995 ⁄ 594.1 = 1 .67 2
1.67
D 5012 5012 ⁄ 594.1 = 8 .44 8
8.44
Total = 20 Seats

The Jefferson Method

The Jefferson Method avoids the problem of an apportionment resulting in a surplus or a deficit of
House seats by using a divisor that will result in the correct number of seats being apportioned. For
example:
If a country had 4 states, and a 20-seat House of Representatives...
2560 + 3315 + 995 + 5012 = 11882
11882 ⁄ 20 = 594.1

State Population Quotient Seats Apportioned

A 2560 2560 ⁄ 594.1 = 4.31 4
B 3315 3315 ⁄ 594.1 = 5.58 5
C 995 995 ⁄ 594.1 = 1.67 1
D 5012 5012 ⁄ 594.1 = 8.44 8
Total = 18 Seats (2 Surplus)

But if the divisor were 550 instead of 594.a...

State Population Quotient Seats Apportioned

A 2560 2560 ⁄ 550 = 4.65 4
B 3315 3315 ⁄ 550 = 6.03 6
C 995 995 ⁄ 550 = 1.81 1
D 5012 5012 ⁄ 550 = 9.11 9
Total = 20 Seats

The Webster Method

The Webster Method is a modified version of the Hamilton/Vinton method. After the state populations
are divided by the divisor, those with quotients that have fractions of 0.5 or above are awarded an extra
seat. States with a quotient with a fraction below 0.5 have the fraction dropped. The size of the house of
representatives is set in order to calculate the divisor, but can be increased in the final apportionment if
a large number of states have fractions above 0.5.
If a country had 4 states, and a planned 20-seat House of Representatives...
2560 + 3315 + 995 + 5012 = 11882
11882 ⁄ 20 = 594.1

State Population Quotient First Left Over Seats

Allocation of Decimal Apportioned
Seats
A 2560 2560 ⁄ 594.1 = 4 .31 4
4.31
B 3315 3315 ⁄ 594.1 = 5 .58 6
5.58
C 995 995 ⁄ 594.1 = 1 .67 2
1.67
D 5012 5012 ⁄ 594.1 = 8 .44 8
8.44
Total = 20 Seats
The Huntington-Hill Method
The Huntington-Hill Method is a modified version of the Webster method, but it uses a slightly different
rounding method. While Webster's method rounds at 0.5, the Huntington-Hill method rounds at the
geometric mean, which is described below. If a state's quotient is higher than its geometric mean, it will
be allocated an additional seat. This method will almost always result in the desired number of seats.
The geometric mean of two numbers is the square root of their product.
For example, the arithmetic mean of 4 and 5 is 4.5:
(4 + 5) ⁄ 2 = 4.5
The geometric mean is 4.47:
(4 x 5) = 20
√(20) = 4.47
If a country had 4 states, and a planned 20-seat House of Representatives...
2560 + 3315 + 995 + 5012 = 11882
11882 ⁄ 20 = 594.1

State Population Quotient Lower Upper Geometric Seats

Quotient Quotient Mean Apportione
d
A 2560 2560 ⁄ 594.1 4 5 4.47 4
= 4.31
B 3315 3315 ⁄ 594.1 5 6 5.48 6
= 5.58
C 995 995 ⁄ 594.1 1 2 1.41 2
= 1.67
D 5012 5012 ⁄ 594.1 8 9 8.49 8
= 8.44
Total = 20 Seats