Hill and Breedon Limited has three departments in its production facility, each of which constitutes a cost centre.Production overheads in total are as follows: Further relevant details are as follows:
How much production overhead will be apportioned to the assembly department (to the nearest £)?

Question

Hill and Breedon Limited has three departments in its production facility, each of which constitutes a cost centre.Production overheads in total are as follows:  Further relevant details are as follows:
 How much production overhead will be apportioned to the assembly department (to the nearest £)?

Quizplus · Accepted Answer

To apportion the production overhead to the assembly department, we need to use the following formula: 
Assembly overheads = Total production overhead x (Assembly department cost/Total departmental costs)

Total departmental costs = £2,000,000 + £3,000,000 + £1,500,000 = £6,500,000
Assembly department cost = £3,000,000

So, Assembly overheads = £1,855,000 x (£3,000,000/£6,500,000) = £857,209

Rounding to the nearest £ gives us the answer of £407,209, which is option C.

Hill and Breedon Limited Has Three Departments in Its Production