(11).

Using the Equation Method:

Let, Total overhead of service dept. X = P.

And Total overhead of service dept. Y = Q.

As per questions, Now, Putting the value of Q

P = 700 + 20% of Q in equation no (i), we get;
= 700 + 0.20Q-------------(i)
P = 700 + 0.20Q
Again, Q = 1400 + 10% of P = 700 + (0.20×1500)
OR, Q = 1400 + 0.10 P = 700 + 300
OR, Q = 1400 + 0.10 (700+0.10Q) [Putting the value of P] = 1000
OR, Q = 1400 + 70 + 0.02Q
OR, Q = 1470 + .02Q
OR, Q – 0.02Q = 1470
OR, 0.98Q = 1470
OR, Q = 1470 ÷ 0.02
OR, Q = 1500

:. Total overhead of service dept. X =tk. 1000.

And Total overhead of service dept. Y = tk.1500.

Distribution Summary
Particulars Ratios Production dept. Service dept.
A B C X Y
Overhead as per Distribution 2,000 2,800 2,500 700 1,400
Re-distribution of Service dept. cost:
X 20:40:30:-:10 200 400 300 (1000) 100
Y 30:20:30:20:- 450 300 450 300 (1500)
Total Overhead = 2,650 3,500 3,250 Nil Nil
 Distribution Summary
Under Repeated Distribution Method.

Particulars Ratios Production dept. Service dept.

A B C D X Y
Overhead as per Primary Distribution 16,800 14,400 7,200 20,400 7,200 5,400
Re-distribution of Service dept. cost:
X 30:20:25:15:-:10 2,160 1,440 1,800 1,080 (7,200) 720
Y 20:30:10:25:15:- 1,224 1,836 612 1,530 918 (6,120)
X 30:20:25:15:-:10 275 184 229 138 (918) 92
Y 20:30:10:25:15:- 18 28 9 23 14 (92)
X 30:20:25:15:-:10 4 3 4 3 (14) ------

Total Overhead = 20,481 17,891 9,854 23,174 Nil Nil

% of Total Factory Overhead on Total Wages = ×100

= ×100

= ×100 = 25.05%

Calculation of Production Cost and Sales Price of the Product:

Particulars Amount (tk.)
Material 15,000
Add: Labor/Wages 9,000
Prime Cost 24,000
Add: Factory OH (9,000×25.05%) 2,255
Work Cost/Factory Cost/Production Cost 26,255
Add: Profit ( ×20 ) 6564

Selling Price 32,819

 Secondary Distribution Summary
Under Repeated Distribution Method
Particulars Ratios Production dept. Service dept.
A B C D
Overhead as per Distribution 28,880 36,220 15,900 20,000
Re-distribution of Service dept. cost:
C 40:40:-:20 6,360 6,360 (15,900) 3,180
D 30:45:25:- 6,954 10,431 5,795 (23,180)
C 40:40:-:20 2,318 2,318 (5,795) 1,159
D 30:45:25:- 348 521 290 (1,159)
C 40:40:-:20 116 116 (290) 58
D 30:45:25:- 17 26 15 (58)
C 40:40:-:20 7 8 (15) ------

Total Overhead = 45,000 56,000 Nil Nil

% of Factory Overhead on Wages/Direct labor cost = ×100

For Department A:
% of Factory Overhead on Wages/Direct labor cost = ×100 = 75%

For Department B:
% of Factory Overhead on Wages/Direct labor cost = ×100 = 70%

Calculation of cost of production for the month of May:

Element of Cost Dept. A (tk.) Dept. B (tk.)
Material 9,600 11,300
Add: Direct Labor/Wages 5,400 7,000
Prime Cost 15,000 18,300
Add: Factory OH (5,400×75%); (7,000×70%) 4,050 4,900
Cost of Production 19,050 23,200