The overhead allocated to the three production cost centres and two service cost centres of the manufacturing
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Question:
The overhead allocated to the three production cost centres and two service cost centres of the manufacturing division of a company were as follows:
After a study it is decided that the costs of the service cost centres should be apportioned as follows:
You are required to calculate the total overhead chargeable to each production cost centre by each of the following methods.
(a) ignoring the service that each of the two service cost centres gives to the other;
(b) using a ‘two-step’ method of apportionment whereby costs of the service cost centre that serves most cost centres is apportioned first, and the other service cost centre is then apportioned to the production cost centres;(c) using the ‘repeated distribution’ or ‘continuous allotment’ method of apportioning the cost of service cost centres among the production and the two service cost centres.
Related Book For
Engineering Economy
ISBN: 978-0132554909
15th edition
Authors: William G. Sullivan, Elin M. Wicks, C. Patrick Koelling
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