Page 100 - Microsoft Word - 00 ACCA F2 Prelims.docx
P. 100
Chaptter 7
Alloocationn and apportionmment
The firsst stage of the absorpption costinng processs involves the allocattion and
apportionment of f overheadss.
Fixed prroductionn overheead
Prroduction Producttion Servvice
cosst centre11 cost centtre 2 cost ceentre 1
2.1 AAllocation
Allocattion involvves charginng overheaads directlyy to specific departmeents (production
and service). Forr example the salary of the cosst centre manager caan be allocaated
directlyy to the cosst centre. AAfter the allocations, the overheead analyssis sheet mmight
look likke this:
Overheead item Basis Prodd cost P Prod cost Service cost T Total
cenntre 1 centre 2 centrre oveerhead
$ $ $ $
Manager salary Allocatiion 500,000 55,000 48,000 1553,000
Indirectt materialss Allocatiion 22,500 12,000 0 1 14,500
Equipmment Allocatiion 55,700 4,600 0 1 10,300
maintenance
94
