A business operates with two production centers and three service centers. Cost have been allocated and...

 

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A business operates with two production centers and three service centers. Cost have been allocated and apportioned to these centers as follows: By A By B By C Units produced Machine hours 1 Labour hours Production center Production center Service center 45% Production center Production center Service center Service center Service center 50% 1 60% $2,000 Information regarding how the service center work for each other and for the production center is given as: Service center Service center 2 45% 20% 40% 2 $3,500 Center 1 1,500 units 3,000 units 2,000 units A 20% A $300 Center 2 Information concerning production requirements in the two production centers is as follows: B 2,000 units 4,500 units 6,000 units B 10% $500 C 10% C $700 Required: a) Using the reciprocal method calculate the total overheads in production centers 1 and 2 after reapportionment of the service center costs. (23 marks) b) Using the most appropriate basis establish the overhead absorption rate for production. A business operates with two production centers and three service centers. Cost have been allocated and apportioned to these centers as follows: By A By B By C Units produced Machine hours 1 Labour hours Production center Production center Service center 45% Production center Production center Service center Service center Service center 50% 1 60% $2,000 Information regarding how the service center work for each other and for the production center is given as: Service center Service center 2 45% 20% 40% 2 $3,500 Center 1 1,500 units 3,000 units 2,000 units A 20% A $300 Center 2 Information concerning production requirements in the two production centers is as follows: B 2,000 units 4,500 units 6,000 units B 10% $500 C 10% C $700 Required: a) Using the reciprocal method calculate the total overheads in production centers 1 and 2 after reapportionment of the service center costs. (23 marks) b) Using the most appropriate basis establish the overhead absorption rate for production.

Answer rating: 100% (QA)

a Using the Reciprocal Method to Calculate the Total Overheads in Production Centers 1 and 2 after Reapportionment of the Service Center Costs Product... View the full answer