Overhead reapportionment
Overhead reapportionment transfers service-centre costs to the production centres benefiting from their work. A direct method ignores services between service centres; a step-down method recognises selected services in sequence; a reciprocal method recognises mutual services. After the transfer, production-centre totals can be absorbed into output. Use service-usage data and distinguish the method required rather than assuming one universal order or basis.
Worked example
A maintenance centre costing $20,000 supplies 75% of its work to production A and 25% to B, with no mutual service complications. Transfer $15,000 to A and $5,000 to B.
Common mistake
Do not absorb service-centre costs directly into products and then add the same costs again through production-centre rates.
Where it appears in your exams
| Qualification | Exam | Relationship | Period |
|---|---|---|---|
| ACCA | MA | Direct | September 2026–June 2027 |
| FIA | FMA | Direct | September 2026–June 2027 |
