• Avatar of John Moffat says

      In fact only 2 departments benefit from the canteen – the canteen is only there to feed the employees in the other 2 departments.

      If you continue with the next example you will see that having got the total cost of the canteen, we then recharge it to the two production departments.

      The approach is always the same – we first allocate and apportion overheads between all of the departments. Then we recharge the service departments to the production departments.

      Example 4 specifically asks for the overheads to be split between all three departments; example 5 then asks for the canteen costs to be reapportioned to the other two departments.

  1. Avatar of John Moffat says

    I assume that you mean example 3 and that you have downloaded the Course Notes.

    The question says (about 4 lines from the end) that the remaining overheads are to be split 40% to assembly and 60% to finishing :-)

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