# Overhead allocation

MWAUGH1983
Trusted RegularRegistered Posts:

**420**
Hi All,

Just wondered if someone could advise how you work out machine value for this.

Particlarly the unit 6 osborne book on pp 122-23 where it has machine dep at 20, 000 with a split of 16,000 and 4,000 (dept x & y respectively) and also has the machine insurance.

Any advise on how to calculate this would be good.

Cheers

Martin

Just wondered if someone could advise how you work out machine value for this.

Particlarly the unit 6 osborne book on pp 122-23 where it has machine dep at 20, 000 with a split of 16,000 and 4,000 (dept x & y respectively) and also has the machine insurance.

Any advise on how to calculate this would be good.

Cheers

Martin

## Comments

2,034I don't have a copy of the question to look at, but in general terms there would be data in the question to show that the total NBV of machinery (or a similar description) and if you were to add them up the total would show that one fifth is in dept y and 4/5ths in dept x.

Hence the £20,000 is divided by 5 and 4/5ths (£16,000) is apportioned to dept x and 1/5th to dept y.

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9Osborne book pg 122

The split is done on the value of machinery;

dept X has machinery with value of £80,000, dept y has machinery with value of £20,000.

therefore dept x has 4/5 of the machinery, dept y has 1/5 of the machinery

dept x takes 4/5ths of the depreciation costs ie £20,000 * 4/5 = £16,000

dept y takes 1/5th of the depreciation costs ie £20,000 *1/5 = £4,000

Hope that is of help