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Hi-Way Ltd. Apportionment of Shared Cost You are working as a Management Accountant in Hi-Way Ltd. a manufacturing company, it has two production departments. Machining
Hi-Way Ltd. Apportionment of Shared Cost You are working as a Management Accountant in Hi-Way Ltd. a manufacturing company, it has two production departments. Machining and Assembly, and two service departments, Repairs and Quality Control. The following information is available about production overhead costs. Total Machining Assembly Repairs Quality Control 15.500 5.000 1.500 5.000 2.400 1500 1.000 2.000 400 Indirect labour cost Indirect materials Factory rental Power costs Depreciation Building Insurance Equipment Insurance 0 5.300 14.400 4100 14.000 1 800 4.200 0 7.400 0 4.500 600HD 6.500 2.400 Note: Depreciation is charge for the use of items of plant and equipment, such as machinery Indirect labour and indirect material costs have been allocated directly to these four cost centres. The other overhead costs are shared between the cost centres and so cannot be allocated directly Other information: Cost of plant/equipment (1) Floor area (square metres) Kilowatt hours (000s) Total 70,000 1800 800 Machining 40,000 500 600 Assembly 15.000 900 100 Repairs 5.000 100 Quality Control 10,000 300 Required: How should the overheads be allocated and apportioned between the four cost centres
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