Skip to content
ACCA exam results — Are you ready?Chat about it >>

Ask the Tutor ACCA MA

accounting for overheads

JJoe9y ago
Hi sir. This is a question from ACCA specimen exams June 2014; A factory consists of two production cost centres (P and Q) and two service cost centres (X and Y). The total allocated and apportioned overhead for each is as follows: P Q X Y $95,000 $82,000 $46,000 $30,000 It has been estimated that each service cost centre does work for other cost centres in the following proportions: P Q X Y Percentage of service cost centre X to 50 50 – – Percentage of service cost centre Y to 30 60 10 – The reapportionment of service cost centre costs to other cost centres fully reflects the above proportions. After the reapportionment of service cost centre costs has been carried out, what is the total overhead for production cost centre P? The answer was worked out as follows; Direct cost $95,000 Proportion of cost centre X (46,000 + (0·10*30,000))*0·50 $24,500 Proportion of cost centre Y (30,000*0·3) $9,000 Total overhead cost for P $128,500 I can't seem to understand how the answer was worked out
John MoffatJohn MoffatTutor9y ago#1
Reapportion Y first. To P goes 30% x 30,000 = 9,000. To X goes 10% x 30,000 = 3,000. So X is now 46,000 + 3,000 = 49,000 Now reapportion X: To P goes 50% x 49,000 = 24,500 So P is now 95,000 + 9,000 + 24,500 = 128,500 Have you watched my free lectures on overheads? The lectures are a complete free course for Paper F2 and cover everything needed to be able to pass the exam well.
Sign in to reply to this topic.