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Consider the following statements.
1. All expenses are overheads.
2. Service cost centre overheads should be apportioned to production cost centres.Which one the following is the correct with regard to the above statements ?
all expenses r not overheads …. there direct manufacturing expenses as well, therefore 1 is wrong.
as for 2, you have probably done those long horrendous exercises which allocate service center costs to production. therefore, 2 is correct
So number 2 is correct or wrong ? because in the sentence they put apportionment, but I think it should be reapportionment. Apportionment or reapportionment ?
The answer said 1 is wrong and 2 is right. I put both also wrong because of the apportionment.
ok. thats what i thought. there is this play on english in these questions that u must be able to recognize.
if u note, allocation, apportionment or reapportionment really refer to the same basic concept: that the costs are being divided on to some other object (in this case the production cost centers).
the reason we use 3 different words to refer to the same concept is so that we can identify and differentiate the steps that we take to do proper accounting of overheads
i also had the same problem but as i kept reading and doing more questions. i was able to figure it out.
one example wd be:
John bought a company car. where will this get recorded?
1. expense
2. assetnow, in this question, the correct answer wd be 2. but u can say that
it shd have said Non-current Assetget it?
A company employs 20 direct production operatives and 10 indirect staff in its manufacturing department. The normal operating hours for all employees is 38 hrs per week and all staff are paid a a basic rate of $5 per hour. Overtime hours are paid a the basic rate +50%. During a particular week all employees worked for 44 hours to meet the company’s general production requirements.
What amount would be charged to production overhead?
A. $300
B. $450
C. $2350
D. $2650
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