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Secondary Distribution of Overheads IN, Cost Accounting (Part - 2) Video Lecture | Cost Accounting - B Com
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FAQs on Secondary Distribution of Overheads IN, Cost Accounting (Part - 2) Video Lecture - Cost Accounting - B Com
| 1. What is secondary distribution of overheads in cost accounting? |  |
Ans. Secondary distribution of overheads in cost accounting refers to the process of allocating and apportioning overhead costs to different cost centers or departments within an organization. It is done after the primary distribution of overheads, which involves charging overhead costs directly to the cost centers where they are incurred. Secondary distribution ensures that overhead costs are allocated fairly and accurately to the cost centers based on their usage or consumption of the overhead resources.
| 2. Why is secondary distribution of overheads necessary in cost accounting? | |
Ans. Secondary distribution of overheads is necessary in cost accounting for several reasons:
- It helps in calculating the total cost of production accurately by allocating overhead costs to different cost centers or departments.
- It enables the management to analyze the performance and efficiency of each cost center or department by comparing their allocated overhead costs.
- It facilitates decision-making by providing cost information related to each cost center or department.
- It ensures fair and equitable allocation of overhead costs to different cost centers based on their usage of resources.
- It helps in determining the selling price of a product or service by including the allocated overhead costs.
| 3. What are the methods used for secondary distribution of overheads in cost accounting? | |
Ans. There are several methods used for secondary distribution of overheads in cost accounting, including:
- Apportionment: This method involves allocating overhead costs to different cost centers based on a predetermined basis, such as the area occupied, the number of employees, or machine hours utilized.
- Reapportionment: It is the process of redistributing overhead costs from service cost centers to production cost centers based on a suitable basis, such as the number of labor hours utilized or the direct labor cost incurred.
- Step method: This method involves allocating overhead costs in a sequential manner, where costs are first allocated to primary cost centers and then reapportioned to secondary cost centers.
- Direct allocation: Under this method, overhead costs are allocated directly to the cost centers where they are incurred without any apportionment or reapportionment.
| 4. How does secondary distribution of overheads impact cost control in cost accounting? | |
Ans. Secondary distribution of overheads plays a crucial role in cost control in cost accounting by providing accurate cost information related to each cost center or department. It helps in identifying the areas where overhead costs are high and allows the management to take necessary measures to control and reduce these costs. By analyzing the allocated overhead costs, cost accountants can identify cost-saving opportunities, make informed decisions regarding resource allocation, and implement cost control strategies effectively. It also helps in monitoring the efficiency and performance of each cost center, which further contributes to cost control efforts.
| 5. What are the challenges faced in the secondary distribution of overheads in cost accounting? | |
Ans. The secondary distribution of overheads in cost accounting can pose several challenges, including:
- Identifying an appropriate basis for allocating overhead costs that accurately reflects the usage or consumption of resources by each cost center.
- Dealing with cost centers or departments that have shared resources, making it difficult to allocate overhead costs accurately.
- Handling overhead costs that are not easily traceable to specific cost centers, such as administrative or general overheads.
- Ensuring consistency and fairness in the allocation of overhead costs across different cost centers or departments.
- Dealing with changes in the cost structure or cost drivers, which may require adjustments in the allocation methods used.
Text Transcript from Video
so far we have discussed two methods
first one is directory distribution and
second one-step method
so now we are going to see the third one
the third one is reciprocal service
method so under this method we have
three subdivisions repeated distribution
method simultaneous equation method and
trial and error method so now I am going
to explain one problem based on three
different methods reciprocal service
method look at the problem the company
has three production departments a B and
C and two service departments x and y
the expenses incurred by them during the
month are for a 80,000 for B 60,000 for
C 40,000 these are the three production
departments and these are the two
service departments for x-23 400 for y
30,000 the expenses of service
departments or a portion to the
production departments on the following
basis so this is a redistribution so now
we are going to redistribute the service
department cost of production department
based on the proportion which is given
in the problem expenses of X its
transferred to all other departments
including service departments okay for a
20 percentage for B 40 percentage for C
30 percentage for white 10 percentage
expenses of Y is transferred to all
production departments and service
department for a 40 percentage for B 20
percentage for C 20 percentage for X 20
percentage so clearly as to how the
expenses of x and y departments would be
apportioned the a B and C departments so
here they have given some information
they asked you to prepare secondary
distribution according to repeated
distribution method simultaneous
equation method and the last one trial
and error method so now I am going to
explain each and everything separately
look at the formal form repeated
distribution method here particular
column
and production departments ABC service
departments X and wide say according to
repeated distribution method first we
need to allocate all the expenses are
all the overheads according to the
primary distribution for each and every
department separately for a 80,000 for
be 60,000 for C 40,000 for X 23 400 for
y 30,000 total expenses for a 80,000 for
be 60,000 for C 40,000 for X 23 400 for
y 30,000 now we need to distribute the
service department cause to all other
production departments including service
department according to the basis of
proportion which is given in the problem
look at the problem expenses of X will
be transferred to three production
department and one service department
and expense of Y will be transferred to
one service department and all other
production department according to the
ratio given in the problem so first
start with X Department so first one
service department X ax for service
department X this will be applicable 20
is to 40 is to 30 is 210 so this will be
taken up and they say very distributed
to all other departments according to
the percentage which is given in the
problem expenses of X is transferred to
ABC and Y for a 20 percentage for be 40
percent which was C 30 percentage for y
10 percentage so 20 plus 40 60 60 plus
30 90 90 plus 10 hundred so 23400 into
20 by hundred four thousand six eighty
four be twenty three thousand four
hundred into 40 by hundred nine thousand
three sixty four C 23400 230 by
hundred seven thousand twenty-four why
23400 into 10 by hundred two thousand
three forty now you have to take a
department-wide total expense how much
30,000 plus two thousand three 40 total
thirty two thousand three forty this
will be redistributed to all other
departments so both production
department and service department
service department why look at the
proportion expenses of why for a 40
percentage for B 20 percentage for C 20
percentage for X 20 percentage total 100
for the first one thirty two thousand
three forty into forty by hundred twelve
thousand nine thirty six four be thirty
two thousand three forty into 20 by
hundred six thousand four sixty a same
percentage was C and X also so six
thousand four sixty eight and six
thousand four sixty eight so this amount
is reapportioned to all other
departments both production as well as
service department now go for the X
Department so service department exa
okay now X have six thousand 468 now
this will be transferred to all other
departments minus six forty six thousand
four sixty eight see the proportion
expenses of X will be proportioned
according to this ratio and expenses of
y will be a portion according to this
ratio so this will be repeated until the
service department gets zero value six
thousand 468 into 20 percentage thousand
294 six thousand 468 into 40 percentage
2000 587 6000 468 into thirty by hundred
and six thousand 468 into 10 by hundred
647
now why department costs transferred to
ABC and x5 a 40 percentage for B 20
percentage for C 20 percentage for X 20
percentage to 59 round of the Frigga for
B 129 for C 129 now get the total and
subtract from 647 balance we have 130
that extra one topic can be given to X
repeat the same procedure until we
exhaust the entire service department
cost now get a total for service
department x and y nil value the entire
amount is distributed to ABC according
to the ratio now get the total for a
ninety nine thousand - not one for being
78640 55,000 599 so this is called as a
repeated distribution method now let us
see the second method simultaneous
equation method say according to this
method the total overhead cost of
service department is ascertained with
help of simultaneous equation even
though the service department cost is
given in the problem we need to find a
service department cost with the help of
simultaneous equation after finding the
value okay we need to redistribute the
value to production department on the
basis of given percentage you may get
more clarity about this while we do
calculations first we need to form the
simultaneous equation for that let small
X is equal to total over heads of
Department X and small Y is equal to
total overheads of department-wide look
at the problem total overheads of X
Department is 23 400 and total over
heads of department y is 30,000 so both
x and y is a service department and look
at the basis of apportionment here
X Department expense is going to
apportion based on this percentage that
is X Department expense is allocated to
Y at ten percentage expenses of
department Y allocated to X at 20
percent ages now you need to convert the
percentage into numbers in order to
convert percentage into numbers 10
divided by 100 is equal to 0.1 20
divided by 100 is equal to 0.2 now form
the equation small X is equal to total
war heads of Department X Hommage twenty
three thousand four hundred plus 0.2 why
okay and second equation y is equal to
total war heads of department y how much
30 thousand know so thirty thousand plus
0.1 X this 0.2 Y represent twenty
percent is this 0.1 X represent ten
percentage which is given in the problem
first equation second equation look at
the first equation X is equal to twenty
three thousand four hundred plus 0.2 Y
same primary distribution cost for X
Department 23 423 400 plus four x 20
percentage of expenses of y department
so 20 percent is 20 divided by hundred
is equal to 0.2 0.2 y in the same way
for second equation y is equal to 30
thousand plus 0.1 X say as per the
primary distribution Department y total
cost thirty thousand now thirty thousand
plus 0.1 X that is expenses of X how
much 10 percent taejun ten by hundred is
equal to 0.1 X look at the first
equation x is equal to twenty three
thousand four hundred plus 0.2 Y so
first you need to convert this a point
two into whole number for that you need
to multiply with a five so five into
point two is equal to one y so first we
need to multiply equation
in 1 by 5 we get 5x is equal to 1 lakh
17,000 plus y that is a 5 into X 5 X 5
min 223 400 is equal to 1 lakh 17,000
and five into 0.2 y is equal to 1 y so
we have got a third equation by
multiplying 5 the next step is now add
equation number 2 and equation number 3
ok so equation in equation number 3 y is
in the left hand side and X in the right
hand side so just take X into left hand
side and take Y into right hand side in
order to add this value along with the
equation number 3 so equation number 3
is 5x is equal to 1 lakh 17 plus y so
take Y in this side and take X in the
left hand side when we transfer this
value into left hand side the plus will
be converted into minus and this plus
will be converted into - look at the
next step the second equation is
converted as minus 0.1 X is equal to 30
thousand minus y just we have
interchange X and y values and third
equation as it is 5x is equal to 1 lakh
17 plus y now solve the equation minus y
plus y will get cancelled plus 30,000
plus 1 lakh 17 thousand will get 1 lakh
47,000 here minus 0.1 X plus 5x is equal
to 4 point 9 X okay so now solve this
equation X is equal to 1 lakh $47,000 by
four point nine will be getting 30
thousand so X values 30 thousand by
solving this equation will be getting X
value as 30,000 after finding the x
value just substitute this value in
equation number one look at the equation
number 1 X is equal to twenty three
thousand four hundred plus 0.2 Y just
substitute x value here thirty thousand
is equal to twenty three four
they're +12 why now solve this equation
30,000 take this value in this side so
you will be getting minus minus 23 400
is equal to 0.2 y 30,000 - 23 400 is
equal to six thousand six hundred is
equal to 0.2 Y so Y is equal to six
thousand six hundred divided by point
two according to this calculation Y
value is 33,000 that is by substituting
30,000 in equation 1 we are getting Y
value as 33,000 according to the
simultaneous equation we have got
x-value and y-value as 30,000 and 33,000
the next step is second distribution
summary this is the format so in
particular column first you have to
start with the total expenses as per the
primary distribution which is given in
the problem as the primary distribution
for production departments of a 80,000
be 60,000 C 40,000 for service
department X 23 404 y 30,000 so total
expense as the primary distribution
80,000 60,000 40,000 23 430,000 now take
X department overheads that will be
reapportioned to all the departments
except X department based on the
percentage which is given in the problem
look at the problem for redistribution
of service department expenses -
production department expenses you need
to follow the percentage which is given
in the problem so expenses of X that is
a according to simultaneous equation we
have got X value as 30,000 and for y
33,000 that value will be apportioned to
all the departments based on the
percentage given in the problem expenses
of so
his department x:s rupees 30000 this
will be apportioned to a b c and y based
on the percentage total 100% AJ twenty
plus forty sixty sixty plus thirteen
ninety ninety plus ten hundred the
entire expenses of X will be transferred
to ABC and wipe expenses of X is thirty
thousand ohm this will be transferred to
ABC and Y for a thirty thousand into 20
by hundred six thousand four be thirty
thousand into forty by hundred twelve
thousand for C thirty thousand into
thirty by hundred nine thousand for y
thirty thousand into 10 by hundred three
thousand after redistributing X expenses
to ABC and Y now we need to find the
total eighty thousand plus six thousand
eighty six thousand sixty plus twelve
seventy two thousand forty plus nine
forty nine thousand here
23400 minus thirty thousand so we'll be
getting minus value will be getting
minus six thousand six hundred for y
thirty plus three thirty three thousand
okay next expenses of service department
y is rupees thirty-three thousand okay
this will be reapportioned to all the
departments except a y based on the
percentage which is given in the problem
for a 40 percentage for B 20 percentage
for C 20 percentage for X 20 percentage
33,000 into 40 by hundred thirteen
233,000 into 20 by hundred six thousand
six hundred thirty three thousand into
20 by hundred same thing six thousand
six hundred and same percentage 20
percent Asian on six thousand
600 sent a 33,000 is reapportioned to
ABC and X now find the total for a
eighty-six thousand plus thirteen
thousand two hundred ninety nine
thousand two hundred four be seventy two
thousand plus six thousand six hundred
seventy eight thousand six hundred fussy
forty nine thousand plus six thousand
six hundred fifty-five thousand six
hundred four X minus six thousand six
hundred plus six thousand six hundred
nil for y plus thirty three thousand
minus thirty three thousand noon so
entire service department x and y total
overheads is reapportioned to a b and c
see the verification step take two
simultaneous equation equation number
one equation number two equation 1 X is
equal to twenty three thousand four
hundred plus 0.2 Y and equation two is y
is equal to thirty thousand plus 0.1 X
so two equations are there x value is
thirty thousand nine thirty thousand is
equal to twenty three four hundred plus
1/2 Y Y value is thirty three thousand
just apply x and y value in order to
verify so twenty three thousand four
hundred plus 0.2 into thirty three is
equal to six thousand six hundred twenty
three four hundred plus six thousand six
hundred is equal to thirty thousand sex
value is 30 thousand am I getting the
same value so thirty thousand is equal
to thirty thousand in the same way for Y
also so Y is equal to thirty three
thousand nine is equal to thirty
thousand plus 0.1 x value thirty
thousand so thirty three thousand is
equal to thirty thousand plus 0.1 into
thirty three thousand so thirty thousand
plus three thousand thirty three
thousand both the values are equal this
is called verification step so we have
got
value and y-value hungry have applied
these two two equations and we have got
the equal value this is called as a
verification step now let us see the
last method say the last method that is
a trial and error method so according to
this method so look at the problem
expenses of X is a portion - y 10
percentage and expenses of Y is a
portion 2x at 20 percentage you have to
take only x-value and y-value sex value
is 23 400 and y-value is 30,000
according to primary distribution now in
the trial and error method expenses of x
is transferred to y at 10 percentage and
expenses of y is transferred to x at 20
percentage this is going to repeat until
we get the 0 value we'll see the
calculation
according to trial and error method here
particular column and to service
departments x and y so as the primary
distribution x value is 20 3 400 Y value
is 30,000 look at the first one expenses
of X is transferred to Y at 10
percentage transfer to Y that is 10
percentage of x value how much
23400 so 23 400 - 10 percentage 2003 40
transferred to Y now second step is
expenses of y is transferred to X at 20
percent agent transferred to X 20
percentage of what 30 plus 2003 40 so 30
2003 40 30 2003 40 into 20 percentage
6000 468 transferred to exa now
transferred to white 6000 468 no certain
percentage 10 percentage of 6000 468
transferred to y 6 for 7 expenses of y
is transferred to X transferred to X
how much 20 percent h2 so 20 percentage
of 647 how much 129 you can round up the
figure now in the same way we need to
repeat the procedure until we'll get the
zero value 10 percentage of 3 is 0.3 so
even we didn't get one so you can put -
now you can find the total for X 23 400
plus 6,000 468 plus 129 plus 3 is equal
to 30,000 for y 30,000 plus 2003 14 plus
647 plus 13 33,000 so we have got
x-value and y-value
according to trial and error method so
far we have discussed your five
different methods under secondary
distribution that is a reapportionment
ax the first one is directory
distribution second one-step method
these two things you have discussed in a
separate video and a reciprocal service
method we have discussed three different
methods repeated distribution method
simultaneous equation method and the
last one trial and error method hope you
all understood this concept thank you
first one is directory distribution and
second one-step method
so now we are going to see the third one
the third one is reciprocal service
method so under this method we have
three subdivisions repeated distribution
method simultaneous equation method and
trial and error method so now I am going
to explain one problem based on three
different methods reciprocal service
method look at the problem the company
has three production departments a B and
C and two service departments x and y
the expenses incurred by them during the
month are for a 80,000 for B 60,000 for
C 40,000 these are the three production
departments and these are the two
service departments for x-23 400 for y
30,000 the expenses of service
departments or a portion to the
production departments on the following
basis so this is a redistribution so now
we are going to redistribute the service
department cost of production department
based on the proportion which is given
in the problem expenses of X its
transferred to all other departments
including service departments okay for a
20 percentage for B 40 percentage for C
30 percentage for white 10 percentage
expenses of Y is transferred to all
production departments and service
department for a 40 percentage for B 20
percentage for C 20 percentage for X 20
percentage so clearly as to how the
expenses of x and y departments would be
apportioned the a B and C departments so
here they have given some information
they asked you to prepare secondary
distribution according to repeated
distribution method simultaneous
equation method and the last one trial
and error method so now I am going to
explain each and everything separately
look at the formal form repeated
distribution method here particular
column
and production departments ABC service
departments X and wide say according to
repeated distribution method first we
need to allocate all the expenses are
all the overheads according to the
primary distribution for each and every
department separately for a 80,000 for
be 60,000 for C 40,000 for X 23 400 for
y 30,000 total expenses for a 80,000 for
be 60,000 for C 40,000 for X 23 400 for
y 30,000 now we need to distribute the
service department cause to all other
production departments including service
department according to the basis of
proportion which is given in the problem
look at the problem expenses of X will
be transferred to three production
department and one service department
and expense of Y will be transferred to
one service department and all other
production department according to the
ratio given in the problem so first
start with X Department so first one
service department X ax for service
department X this will be applicable 20
is to 40 is to 30 is 210 so this will be
taken up and they say very distributed
to all other departments according to
the percentage which is given in the
problem expenses of X is transferred to
ABC and Y for a 20 percentage for be 40
percent which was C 30 percentage for y
10 percentage so 20 plus 40 60 60 plus
30 90 90 plus 10 hundred so 23400 into
20 by hundred four thousand six eighty
four be twenty three thousand four
hundred into 40 by hundred nine thousand
three sixty four C 23400 230 by
hundred seven thousand twenty-four why
23400 into 10 by hundred two thousand
three forty now you have to take a
department-wide total expense how much
30,000 plus two thousand three 40 total
thirty two thousand three forty this
will be redistributed to all other
departments so both production
department and service department
service department why look at the
proportion expenses of why for a 40
percentage for B 20 percentage for C 20
percentage for X 20 percentage total 100
for the first one thirty two thousand
three forty into forty by hundred twelve
thousand nine thirty six four be thirty
two thousand three forty into 20 by
hundred six thousand four sixty a same
percentage was C and X also so six
thousand four sixty eight and six
thousand four sixty eight so this amount
is reapportioned to all other
departments both production as well as
service department now go for the X
Department so service department exa
okay now X have six thousand 468 now
this will be transferred to all other
departments minus six forty six thousand
four sixty eight see the proportion
expenses of X will be proportioned
according to this ratio and expenses of
y will be a portion according to this
ratio so this will be repeated until the
service department gets zero value six
thousand 468 into 20 percentage thousand
294 six thousand 468 into 40 percentage
2000 587 6000 468 into thirty by hundred
and six thousand 468 into 10 by hundred
647
now why department costs transferred to
ABC and x5 a 40 percentage for B 20
percentage for C 20 percentage for X 20
percentage to 59 round of the Frigga for
B 129 for C 129 now get the total and
subtract from 647 balance we have 130
that extra one topic can be given to X
repeat the same procedure until we
exhaust the entire service department
cost now get a total for service
department x and y nil value the entire
amount is distributed to ABC according
to the ratio now get the total for a
ninety nine thousand - not one for being
78640 55,000 599 so this is called as a
repeated distribution method now let us
see the second method simultaneous
equation method say according to this
method the total overhead cost of
service department is ascertained with
help of simultaneous equation even
though the service department cost is
given in the problem we need to find a
service department cost with the help of
simultaneous equation after finding the
value okay we need to redistribute the
value to production department on the
basis of given percentage you may get
more clarity about this while we do
calculations first we need to form the
simultaneous equation for that let small
X is equal to total over heads of
Department X and small Y is equal to
total overheads of department-wide look
at the problem total overheads of X
Department is 23 400 and total over
heads of department y is 30,000 so both
x and y is a service department and look
at the basis of apportionment here
X Department expense is going to
apportion based on this percentage that
is X Department expense is allocated to
Y at ten percentage expenses of
department Y allocated to X at 20
percent ages now you need to convert the
percentage into numbers in order to
convert percentage into numbers 10
divided by 100 is equal to 0.1 20
divided by 100 is equal to 0.2 now form
the equation small X is equal to total
war heads of Department X Hommage twenty
three thousand four hundred plus 0.2 why
okay and second equation y is equal to
total war heads of department y how much
30 thousand know so thirty thousand plus
0.1 X this 0.2 Y represent twenty
percent is this 0.1 X represent ten
percentage which is given in the problem
first equation second equation look at
the first equation X is equal to twenty
three thousand four hundred plus 0.2 Y
same primary distribution cost for X
Department 23 423 400 plus four x 20
percentage of expenses of y department
so 20 percent is 20 divided by hundred
is equal to 0.2 0.2 y in the same way
for second equation y is equal to 30
thousand plus 0.1 X say as per the
primary distribution Department y total
cost thirty thousand now thirty thousand
plus 0.1 X that is expenses of X how
much 10 percent taejun ten by hundred is
equal to 0.1 X look at the first
equation x is equal to twenty three
thousand four hundred plus 0.2 Y so
first you need to convert this a point
two into whole number for that you need
to multiply with a five so five into
point two is equal to one y so first we
need to multiply equation
in 1 by 5 we get 5x is equal to 1 lakh
17,000 plus y that is a 5 into X 5 X 5
min 223 400 is equal to 1 lakh 17,000
and five into 0.2 y is equal to 1 y so
we have got a third equation by
multiplying 5 the next step is now add
equation number 2 and equation number 3
ok so equation in equation number 3 y is
in the left hand side and X in the right
hand side so just take X into left hand
side and take Y into right hand side in
order to add this value along with the
equation number 3 so equation number 3
is 5x is equal to 1 lakh 17 plus y so
take Y in this side and take X in the
left hand side when we transfer this
value into left hand side the plus will
be converted into minus and this plus
will be converted into - look at the
next step the second equation is
converted as minus 0.1 X is equal to 30
thousand minus y just we have
interchange X and y values and third
equation as it is 5x is equal to 1 lakh
17 plus y now solve the equation minus y
plus y will get cancelled plus 30,000
plus 1 lakh 17 thousand will get 1 lakh
47,000 here minus 0.1 X plus 5x is equal
to 4 point 9 X okay so now solve this
equation X is equal to 1 lakh $47,000 by
four point nine will be getting 30
thousand so X values 30 thousand by
solving this equation will be getting X
value as 30,000 after finding the x
value just substitute this value in
equation number one look at the equation
number 1 X is equal to twenty three
thousand four hundred plus 0.2 Y just
substitute x value here thirty thousand
is equal to twenty three four
they're +12 why now solve this equation
30,000 take this value in this side so
you will be getting minus minus 23 400
is equal to 0.2 y 30,000 - 23 400 is
equal to six thousand six hundred is
equal to 0.2 Y so Y is equal to six
thousand six hundred divided by point
two according to this calculation Y
value is 33,000 that is by substituting
30,000 in equation 1 we are getting Y
value as 33,000 according to the
simultaneous equation we have got
x-value and y-value as 30,000 and 33,000
the next step is second distribution
summary this is the format so in
particular column first you have to
start with the total expenses as per the
primary distribution which is given in
the problem as the primary distribution
for production departments of a 80,000
be 60,000 C 40,000 for service
department X 23 404 y 30,000 so total
expense as the primary distribution
80,000 60,000 40,000 23 430,000 now take
X department overheads that will be
reapportioned to all the departments
except X department based on the
percentage which is given in the problem
look at the problem for redistribution
of service department expenses -
production department expenses you need
to follow the percentage which is given
in the problem so expenses of X that is
a according to simultaneous equation we
have got X value as 30,000 and for y
33,000 that value will be apportioned to
all the departments based on the
percentage given in the problem expenses
of so
his department x:s rupees 30000 this
will be apportioned to a b c and y based
on the percentage total 100% AJ twenty
plus forty sixty sixty plus thirteen
ninety ninety plus ten hundred the
entire expenses of X will be transferred
to ABC and wipe expenses of X is thirty
thousand ohm this will be transferred to
ABC and Y for a thirty thousand into 20
by hundred six thousand four be thirty
thousand into forty by hundred twelve
thousand for C thirty thousand into
thirty by hundred nine thousand for y
thirty thousand into 10 by hundred three
thousand after redistributing X expenses
to ABC and Y now we need to find the
total eighty thousand plus six thousand
eighty six thousand sixty plus twelve
seventy two thousand forty plus nine
forty nine thousand here
23400 minus thirty thousand so we'll be
getting minus value will be getting
minus six thousand six hundred for y
thirty plus three thirty three thousand
okay next expenses of service department
y is rupees thirty-three thousand okay
this will be reapportioned to all the
departments except a y based on the
percentage which is given in the problem
for a 40 percentage for B 20 percentage
for C 20 percentage for X 20 percentage
33,000 into 40 by hundred thirteen
233,000 into 20 by hundred six thousand
six hundred thirty three thousand into
20 by hundred same thing six thousand
six hundred and same percentage 20
percent Asian on six thousand
600 sent a 33,000 is reapportioned to
ABC and X now find the total for a
eighty-six thousand plus thirteen
thousand two hundred ninety nine
thousand two hundred four be seventy two
thousand plus six thousand six hundred
seventy eight thousand six hundred fussy
forty nine thousand plus six thousand
six hundred fifty-five thousand six
hundred four X minus six thousand six
hundred plus six thousand six hundred
nil for y plus thirty three thousand
minus thirty three thousand noon so
entire service department x and y total
overheads is reapportioned to a b and c
see the verification step take two
simultaneous equation equation number
one equation number two equation 1 X is
equal to twenty three thousand four
hundred plus 0.2 Y and equation two is y
is equal to thirty thousand plus 0.1 X
so two equations are there x value is
thirty thousand nine thirty thousand is
equal to twenty three four hundred plus
1/2 Y Y value is thirty three thousand
just apply x and y value in order to
verify so twenty three thousand four
hundred plus 0.2 into thirty three is
equal to six thousand six hundred twenty
three four hundred plus six thousand six
hundred is equal to thirty thousand sex
value is 30 thousand am I getting the
same value so thirty thousand is equal
to thirty thousand in the same way for Y
also so Y is equal to thirty three
thousand nine is equal to thirty
thousand plus 0.1 x value thirty
thousand so thirty three thousand is
equal to thirty thousand plus 0.1 into
thirty three thousand so thirty thousand
plus three thousand thirty three
thousand both the values are equal this
is called verification step so we have
got
value and y-value hungry have applied
these two two equations and we have got
the equal value this is called as a
verification step now let us see the
last method say the last method that is
a trial and error method so according to
this method so look at the problem
expenses of X is a portion - y 10
percentage and expenses of Y is a
portion 2x at 20 percentage you have to
take only x-value and y-value sex value
is 23 400 and y-value is 30,000
according to primary distribution now in
the trial and error method expenses of x
is transferred to y at 10 percentage and
expenses of y is transferred to x at 20
percentage this is going to repeat until
we get the 0 value we'll see the
calculation
according to trial and error method here
particular column and to service
departments x and y so as the primary
distribution x value is 20 3 400 Y value
is 30,000 look at the first one expenses
of X is transferred to Y at 10
percentage transfer to Y that is 10
percentage of x value how much
23400 so 23 400 - 10 percentage 2003 40
transferred to Y now second step is
expenses of y is transferred to X at 20
percent agent transferred to X 20
percentage of what 30 plus 2003 40 so 30
2003 40 30 2003 40 into 20 percentage
6000 468 transferred to exa now
transferred to white 6000 468 no certain
percentage 10 percentage of 6000 468
transferred to y 6 for 7 expenses of y
is transferred to X transferred to X
how much 20 percent h2 so 20 percentage
of 647 how much 129 you can round up the
figure now in the same way we need to
repeat the procedure until we'll get the
zero value 10 percentage of 3 is 0.3 so
even we didn't get one so you can put -
now you can find the total for X 23 400
plus 6,000 468 plus 129 plus 3 is equal
to 30,000 for y 30,000 plus 2003 14 plus
647 plus 13 33,000 so we have got
x-value and y-value
according to trial and error method so
far we have discussed your five
different methods under secondary
distribution that is a reapportionment
ax the first one is directory
distribution second one-step method
these two things you have discussed in a
separate video and a reciprocal service
method we have discussed three different
methods repeated distribution method
simultaneous equation method and the
last one trial and error method hope you
all understood this concept thank you
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