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- This topic has 1 reply, 2 voices, and was last updated 7 years ago by John Moffat.
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- May 6, 2017 at 8:26 am #385050
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 $128,500I can’t seem to understand how the answer was worked out
May 6, 2017 at 10:25 am #385072Reapportion 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 = 49,000Now 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.
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