Page 67 - BA2 Integrated Workbook STUDENT 2018

Overhead analysis

Overheads which require to be apportioned to the cost centres are:

Electricity $13,000

Cleaning $5,000

Human resource costs $16,000

You are given the following data about the cost centres:

Prod cost Prod cost Service cost Total
centre 1 centre 2 centre
Staff numbers 25 9 6 40
Labour hours 15,000 10,000 6,000 31,000
Machine hours 20,000 6,000 0 26,000
3
Floor area (M ) 5,000 4,500 500 10,000

 Select an appropriate apportionment basis for each overhead cost.

 Calculate the overhead to be apportioned to each cost centre.

Total overhead
–——————————————— × Value of apportionment basis for cost centre
Total value of apportionment basis

 Check that the total overhead apportioned is correct.

Suitable bases for overheads:

Electricity – Machine hours
Cleaning – Floor area
Human resource costs – Staff numbers

Illustrations and further practice

Now try TYU 1

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