A company has three production centres, A, B and C and two service cost centres, X and Y. Costs allocated to service centres are required to be apportioned to the production centres to find our cost of production of different products. It is found that benefit of service cost centres is also received by each other along with the production cost centres. 

Overhead costs as allocated to the five cost centres and estimates of benefit of service cost centres received by each of them are as under: 

Required: 

Work out final overhead costs of each of the production departments including reapportioned cost of service centres using 

(a). Continuous distribution method

(b). Simultaneous equation method.

Transcribed Image Text:

Cost centres A B C X Y Overhead costs as allocated (Rs.) 80,000 40,000 20,000 20,000 10,000 Estimates of benefits received from service centres (%) X 20 30 40 10 Y 20 25 50 5