Cambrige AS and A Level Accounting Notes (9706)/ ZIMSEC  Advanced Accounting Level Notes: Reapportionment of service costs where there is interwork

  • This is a solution to the question found here
  • First we will use the repeated distribution method to redistribute service costs
  • Lastly we will use the algebraic method to reapportion costs
  • We have already looked at why we need to reapportion service costs among production departments here

Repeated Distribution Method

Already allocated70 00030 00020 00015 000
Recharge stores10 0006 000

(20 000)

4 000

-----19 000
Recharge maintenance8 5507 600

2 850

(19 000)

2 850----
Recharge stores1 425855

(2 850)


Recharge maintenance257228



Recharge stores4325



Recharge stores87



Recharge stores11(2)

90 284

44 716



  • As shown the technique is simple you need to pick one service department and reapportion all its overheads to the other three departments in our case we first picked stores
  • Then you pick the other department (in this case maintenance) and reapportion all its overheads to the other three departments
  • The second step means there are now overheads costs in the stores department due to its share of the maintenance costs
  • This cost has to be reapportioned again
  • This process is repeated until there are immaterial costs in all service departments which can be reapportioned among the two production departments without the need to reapportion a share into the service departments
  • In our case there remains $2 in the end which we split equally among the two departments (a result of rounding off $0.6
  • We could have continued with the reapportioning but the benefits from continuing would not have been much
  • You will have to use your discretion to determine when to stop reapportioning but its something you can do when amounts reach single digits

The Algebraic Method

  • This involves the use of simultaneous equations to solve the problem of having to reapportion costs
  • From our question we know that the total overheads in the stores department ought to be $20 000 plus 15% of the maintenance costs
  • However we don’t know what the actual final for total overheads will be since they will also have to include a 20% share of stores cost which have already said ought to include a share of the maintenance costs
  • From the above we have two unkowns i.e. the actual maintenance costs and the actual stores costs s
  • We can thus formulate two equations:
  • s=20000+0.15m
  • m=15000+02s
  • Now there a number of ways to solve simultaneous equations but here we will use the substitution method
  • Replace M in equation 1 to get:
  • s=20000+2250+0.03s
  • This becomes:
  • 0.97s=22250
  • Which after we divide both sides by 0.97 gives:
  • \text{s=\$22 938}
  • Now that we know the value of things get a little easier all you have to do is substitute the value of into the second equation above:
  • m=15000+0.2(22938)
  • Solving this gives:
  • \text{m=\$19 588}
  • What all this means is that the total stores overheads including a share of maintenance overheads is $19 588
  • It also means the total maintenance overheads including the share of stores overheads is $22 938
  • Now we can reapportion these costs easily as shown below:
Already Allocated70 00030 00020 00015 000
Recharge stores11 4696 881(22938)4 588
Recharge maintenance8 8157 8352 938(19 588)

90 284

44 716



  • Despite all appearances the algebraic is much faster and accurate that the repeated reapportionment method
  • Wherever possible always use the algebraic method unless otherwise directed by the exam question

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