SP pic is engaged mainly in retailing fashion and leisure wear, camping equipment and protective clothing. The company's head office and warehouse are located on the east coast and the 50 shops it operates are divided into three divisions as follows:

(a) Prepare a statement showing how you would apportion the costs of the service functions to each of the retailing divisions.
(8 marks)

(b) Explain, in a brief report, why you have selected the bases of apportionment that you have used in

(a) above and state any limitations.

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Division North-west West No. of shops 16 13 21 South Servicing of the shops is undertaken from the head office for: personnel and staff training window display, sales promotion and advertising warehousing and distribution - no goods are delivered direct to the shops from the manufacturers. Costs for the three service functions are budgeted for the next financial year, as shown below, and it is desired to determine methods of apportioning these costs to the three retailing divisions. Window display, sales promotion Warehousing and distribution Personnel and staff training and advertising 000 000 000 Wages Transport 40 65 140 9 30 115 Other costs 8 135 30