Reference no: EM132557043

A company reapportions the costs incurred by two service cost centers, materials handling and inspection, to the three production cost centers of machining, finishing and assembly. The following are the overhead costs which have been allocated and apportioned to the five cost centers.

Rs. '000

Machining 4,000

Finishing 2,000

Assembly 1,000

Materials handling 1,000

Inspection 500

Question 1: Estimates of the benefits received by each cost centers are as follows:

           Machining            Finishing               Assembling            Materials             Handling

Inspection

Materials   30%                   25%                        35%                     -                           10%

handling

Inspection    20%                        30%                      45%                    5%                             -

Question 2: You are required to calculate the charge for overhead to each of the three production cost centers, including the amounts reapportioned from the two service centers. using:

i. The continues allotment (or repeated distribution method)

ii. An algebraic method