A company reapportions the costs incurred by two service cost centres, materials handling and inspection, to the three production cost centres of machining, finishing and assembly.

The following are the overhead costs which have been allocated and apportioned to the five cost centres: (Sh.000)

Machining 400

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Finishing 200

Assembly 100

Materials handling 100

Inspection 50

Estimates of the benefits received by each cost Centre are as follows:


Machining Finishing Assembly handling Inspection

% % % % %

Materials handling 30 25 35 — 10