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Hello John,
Could you please help me to understand this question?There are two production cost centers C1 and C2 and two service cost centers S1, S2.
Total overheads:
C1 C2 S1 S2
$12000 $17000 $9500 $8000each service cost centers works for other cost centers in the following proportions:
C1 C2 S1 S2
% of service cost center S1 to: 60% 40% – –
% of service cost center S2 to 35% 35% 30% –What is the total overhead for production cost center C1?
A $17700
B $19140
C $21940
D $23240Sorry I just dont understand it at all? 🙂
Thanks for your help!
PeterYou need to recharge service centre S2 to the other centres using the %’ages given.
Then you need to recharge the resulting total for service centre S1 to the other centres, again using the %’ages given.
Then you can add up for C1 and you will have the answer you need.
You really need to watch my free lectures on this (it is chapter 8 of the free lecture notes and the lectures that go with them), because all of this is explained (with examples) and I cannot type out the whole of the lecture here.
(My 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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