Q1

What basis would you follow for distribution

of the following overhead expenses to
departments
Expenses Basis of Apportionment
1 Stores Services Expenses Value of materials consumed by each dept
2 ESI No.of Employees /wages paid by each dept.
3 Factory Rent Floor area
4 Municipal Rent, Rate & taxes Floor area
5 Insurance on Building & Machinery Value of the assets
6 Wefare department expenses No.of Employees
7 Creche expenses No.of Female employees/Moms
8 Steam Floor area/machinery
9 Electric Light no. of light points
10 Fire Insurance value of assets
 Q 2.The Modern Ltd. is divided into 4
departments: A, B, C are production The following
departments & D is a service dept. information is
the actual costs for a period is as available in respect of
follows 4 departments.
Particulars Rs.
Rent 1000
Repairs to Plant 600 Area (sq.metres)
Depreciation of plant 450 No.of Employees
Employer's liabilty for Insurance 150 Total wages
Supervision 1500 Value of plant
Fire Insurance in respect of stock 500 Value Stock
Power 900 H P of Plant
Light 120

OVERHEADS DISTRIBUTION SUMMARY

Basis of
ITEM TOTAL AMOUNT Apportionment

1 Rent 1000 Area (sq.metres)

2 Repairs to Plant 600 Value of plant
3 Depreciation of plant 450 Value of plant
4 Employer's liabilty for Insurance 150 No.of Employees
5 Supervision 1500 No.of Employees
6 Fire Insurance in respect of stock 500 Value Of Stock
7 Power 900 H P of Plant
8 Light 120 Area (sq.metres)
TOTAL 5220
 Apportio
n the
costs to
the
various
departme
nts on the
most
equitable
basis

Dept.A Dept.B Dept.C Dept.D Propotionate Equation

1500 1100 900 500 15:11:9:5
20 15 10 5 4:3:2:1
6000 4000 3000 2000
24000 18000 12000 6000 4:3:2:1
15000 9000 6000 0 5:03:02
24 18 12 6 4:3:2:1

N SUMMARY

Production Departments Service Department

A B C D
375 275 225 125
240 180 120 60
180 135 90 45
60 45 30 15
600 450 300 150
250 150 100 0
360 270 180 90
45 33 27 15
2110 1538 1072 500