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03 - Accounting & Taxes Accounting Help & Tax Strategies

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  #1  
Old 10-25-2005, 09:28 AM
clarity clarity is offline
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Join Date: Oct 2005
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Default repeated apportionment method

Hi, i am really confused on how to calculate the total factory overhead of production departments using the repeated apportionment method.
How do we use the method when the question says---

Costs of service departments are apportioned on the basis of the following percentages
Servise department X to A 50%, X to B 30%, Xto Y 20%
Service department Y to A 40%, Y to B 50%, Y to X 10%

Following figures of departmental costs are available after the primary distribution:-
Department A Rs.15,750
Department B Rs.7,500
Department X Rs.11,750
Department Y Rs.5,000

I really need tips on solving this question.Any Hints ???
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  #2  
Old 10-25-2005, 11:50 AM
OldJack
 
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Well... First I don't do homework and second I have no idea what "Rs." means. hmmm
Fact not pointed out in the problem: The total of all departments Rs.= 40,000.

I can't explain how it works but the answer is A gets 55% of the total of X+Y (11750+5000=16750*55%=9212.50 or 9250 if unrounded %) and B gets 45% of the total of X+Y (16750*45%=7537.50 or 7500 if unrounded %). Therefore A=15750+9212.50=24962.50 and B=15037.50 and A+B=40,000.

Rounding could result in A=15750+9250=25,000
Rounding could result in B= 7500+7500=15,000
Total............................................. .=40,000

It may have a theory of X's 20% going to Y with 10% coming from Y but 20% of the 10% goes back to Y etc. The end result is 5% of the total of X+Y's %gets added to A and B's percentage.

Hope this give you a hint.
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