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Prod 1 Prod 2 Stores dept Maintenance dept Overhead costs $ 24,000 16,000 10,000 8,000 Cost of material requisitions 40,000 35,000 - 15,000 Mnance hours

Prod 1

Prod 2

Stores dept

Maintenance dept

Overhead costs $

24,000

16,000

10,000

8,000

Cost of material requisitions

40,000

35,000

-

15,000

Mnance hours needed (hrs)

8,000

4,500

1,500

Required:

a) Use the repeated distribution method to apportion the overhead costs of the two service centres

b) Ascertain the total overhead costs of the production departments

c) Compare the overall cost of the production departments using the repeated distribution method and the traditional overhead absorption method.

d) Comment on the benefits or drawbacks of using the repeated distribution method of overhead absorption

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