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CMA Intermediate · Cost Accounting · Overheads

In the repeated distribution (continuous allotment) method of secondary distribution, the process of re-apportioning service department costs between two service departments is continued until:

The repeated distribution method continues re-apportioning service department costs back and forth until the balance left in the service departments becomes negligible, so that virtually the entire cost is carried by production departments. It does not stop after a fixed number of rounds.

  1. AThe cost of one service department becomes equal to that of the other
  2. BThe amounts remaining in the service departments become negligibleCorrect
  3. CEach service department has been apportioned exactly twice
  4. DProduction departments have received equal shares

Explanation

Under the repeated distribution method, service departments' costs are shared among each other and the production departments repeatedly. Each round leaves a smaller residual in the service departments. The process stops when the residual is negligible, so that all cost sits in production departments. Fixing the number of rounds at two is not the rule.

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