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Good Day Sir
Please help:
P Q X Y
$95,000 $82,000 $46,000 $30,000P Q X Y
% of service cost centre x to 50 50 – –
% of service cost centre y to 30 60 10 –Question asks to reapportion to P
My answer:
P=95000+0.5X+0.3Y
X=46000
Y=30000+0.1X30000+0.1(46000) Y=34,6000
P=95000+0.5(46,000)+0.3(34,6000)
=128300Answer is 128,500
I assume you are wanting to know why your answer is wrong??
You have written: Y = 30,000 + 0.1X.
This is not the case – 10% of Y is apportioned to X.Although by all means write equations, you don’t need to (unless it is reciprocal apportionment, which is not the case here).
Apportion Y first: 9,000 goes to P, and 3,000 goes to X.
X is now 46000 + 3000 = 49000
Now apportion X: 50% x 49000 = 24,500 goes to P.So total for P is 95000 + 9000 + 24500 = 128,500
Yes Sir thanks I was wondering why it is incorrect
I understand now.
In this question they do not mention that it is reciprocal apportionment
Thank you very much
They do not mention reciprocal apportionment (and they probably won’t do in the exam, even if it is necessary). Reciprocal apportionment is only relevant when each service department does work for the other service department.
That is not the case here – here Y does work for X, but X does not do work for Y. So it is not reciprocal apportionment.
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