12.9 Curtis Bedford is MD of the family business, Bedford Bowler. The company manufactures children’s wooden trainsets. Recently Curtis has been on a course about costing and he is keen to apply his new knowledge to the business. Thinking through the production process, he can identify three principal cost centres: machining, assembly and painting, and packaging.

Curtis’s accountant supplies the following summary of production overheads incurred by the business to the most recent year-end, 31 December 2012. Curtis adds a note of what he thinks is the most appropriate method of apportionment between cost centres.

£ Basis of apportionment Factory rental 21 105 Floor area Packaging machine leasing charges 5 500 Actual (see note)

Cleaners’ wages 17 991 1/3 to each cost centre Factory rates 6 930 Floor area Electricity – factory 8 280 Actual Supervision 21 456 No. of employees Machinery maintenance and repair 4 472 Call outs Machinery depreciation 12 250 Net book value Total 97 984 Note: the packaging machine leasing charges relate only to machinery used in the packaging cost centre. There is no other machinery in the packaging department.

The following information is relevant for the apportionment of overheads:

Total Machining Assembly Packaging Floor area 6 300 sq.m. 2 500 sq.m. 1 700 sq.m. 2 100 sq.m.

Employees 18 5 9 4 Machinery NBV 61 250 35 000 26 250 –

Electricity 8 280 3 905 1 892 2 483 Call outs 8 5 3 Required: produce a schedule apportioning the overheads between the two departments (cost centres).