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Chapter 7
Overheads which require to be apportioned to the cost centres are:
Electricity $13,000
Cleaning $5,000
Human resource costs $16,000
The following data about the cost centres is available:
Prod cost Prod cost Service cost Total
centre 1 centre 2 centre
Staff numbers 25 19 6 50
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
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