Overhead allocation
MWAUGH1983
Registered 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 12223 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 12223 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
0
Comments

Martin
I 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.0 
You may have worked this out by now but if not.
Osborne 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 help0
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