A-LevelAccountingTraditional costing methods9706/12 · Oct/Nov 2023 · Q251 Mark
A manufacturing business has a service department, X, and production departments, Y and Z. Department Z is labour intensive. How is the overhead absorption rate set for department Z?
Afirst task: apportion total overheads across X, Y and Z; second task: reapportion X's overheads to Y and Z; third task: divide Z's overheads by budgeted labour hours
Bfirst task: apportion total overheads across X, Y and Z; second task: reapportion X's overheads to Y and Z; third task: divide Z's overheads by actual labour hours
Cfirst task: subtract X's overheads from total overheads; second task: apportion remaining overheads across Y and Z; third task: divide Z's overheads by budgeted labour hours
Dfirst task: subtract X's overheads from total overheads; second task: apportion remaining overheads across Y and and Z; third task: divide Z's overheads by actual labour hours
✓ Correct answer
A: first task: apportion total overheads across X, Y and Z; second task: reapportion X's overheads to Y and Z; third task: divide Z's overheads by budgeted labour hours
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