Costs and Revenues - Help!

broom123

I'm sitting my costs and revenues exam tomorrow and I am stuck on one of the practice questions from the AAT site.

On the 4th practice test on task 1.4, I have filled in the first section for reapportionment however on the model answers it says 104832 should be apportioned to contract services AND vehicle maintenance and repairs for light, heat and power at premises, similarly 430600 is apportioned to both of these too for indirect labour, could anybody tell me why this is?

cazalino

i think this is an error on the answers because if you take the 'Light, Heat and power at Premises' for example it should total 166400 yet if you add the 4 amounts up (104832,104832, 36608, 24960) it totals more than it should but if you dont include the 104832 under 'Contract Services' then it adds up. Same with 'Indirect Labour'

Good luck tomorrow - i passed mine today

Nps

Hi,

I'm afraid I don't really understand your question, but I have just done the practice question and can confirm that the answer given is correct. My answer all adds up and matches the model answer. If you can rephrase your question, I'll try and show you where you are going wrong.

Nps

I'm re-reading your question and think I know what you're asking. Are you asking why the support centre costs are shared amongst the contract and scheduled service departments? If so, the reason is that all the expenses (rates, lights, labour etc) must ultimately be shared amongst the contract and scheduled service departments (as they are profit centres). No costs can be left with the support departments, as they are only cost centres.

Therefore the fairest way to do this is to apportion the costs, firstly to the support centres by the chosen apportionment method. These total costs are then shared out amongst the two service departments in the same proportion that they make use of the support centres, the details of which are shown in the question. This then results in the total costs all being shared amongst the two profit centres with no costs left in the cost centres.

Apologies if this is not what you were asking.

broom123

Hi,

Sorry, what I mean is, the total figure for 'light, heat and power at premises' is 166400, I apportioned 104832 to 'vehicle maintenance and repairs', 36608 to 'fuel and parts stores' and 24960 to 'general admin', when I checked the model answers, all these figures are correct however there is an additional figure of '104832 that has also been apportioned to contract services.

The figure for indirect labour was apportioned in a similar way.

Does this make more sense?

Nps

Ah yes, ignore the 104832 and 430600 in the second column - they shouldn't be there. I think the third column has been mistakenly copied over to the second column.

Apologies, I only checked the final totals. I can confirm that those extra figures are not included in the subsequent calculations and are not included anywhere else either).

Also apologies for my last post as I have answered a question which you weren't asking!

broom123

Thank you very much for your help! :001_smile: