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Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA MA – FIA FMA › Accounting for overhead
Question 7a.15 from BPP practice book
Why don’t we calculate overhead for department Q after reapportionment ?
Thank you
Because the question only asks for the overheads for department P !!
Question 7a.23 from BPP practice
When we recharge canteen . The equation will be 83.520 * 45% ( mixing Dept ) = 37.584 and 83.520 * 40% (stirring ) = 33.408
But in the answer shown ” 44216 ” and ” 39304 ”
How can they have that number ?
2- can you talk lil bit about “direct method” and “step down method” , you haven’t mentioned it in your lecturer .
Thank you Mr John
I assume you understood my reply to you about 7a.15. (since you have made no comment!!)
The direct method is as explained in the answer to 7a.22. The service departments are apportioned directly to the production departments and not to other service departments. However this is not strictly correct and is therefore rare in the exam.
The step-down method is the reciprocal method that I show in my lectures, and this is the normal way. The BPP answer to 7a.23 is wrong – they started correctly, but then should have continued apportioning reciprocally (or used the equations).
Yes . I do understand 7a.15 now ( as I thought i have to calculate all departments all the time like what you shown in your lecture ) .
Thank you for the reply of question 7a23 …
For question 7a26 .
They said ” no overhead is reapportioned to service department Y , so the balance of overhead should be reapportioned 40/90 and 50/90 ” ( which I understand they reapportioned by direct method )
Assuming department Y still need to be reapportioned , then I will use ” step down method ” ? Mean 600* 40% and 600* 50% ?
Is it correct ?
Thank you Mr John
Yes – that is correct 🙂