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Apportionment for reciprocal basis Each service department has to receive and give their cost each other on the basis of agreed ratio. There are three methods which may be used for the reciprocal basis. Simultaneous Equation Method Repeated distribution Method Trial and Error Method $35 Simultaneous Equation Method: In this method, the total overhead cost for each service department is expressed in the form of algebraic equation with the help of percentage of distribution of the service cost. Draw backs: It needs a large number of calculations and is not suitable where there are more than two service department. Repeated Distribution Method: Under this method overhead of service departments are redistributed to the production department as well as service department on the basis of agreed percentage. This process is repeated till the amount of service departments are exhausted. Trial and Error method: Under this method the cost of one service department is apportioned to another department. The department plus share received from department first department is again apportioned to first department and this process is repeated till the balancing figure becomes negligible. Problem: 4 A company has three production departments and two service departments and for a perio the departmental distribution summary has the following totals: Production Departments: Rs. X - Rs-1000; Y - Rs.900 and Z - Rs.600 = 2500 Service Departments: A - Rs. 200, B - Rs.150 350 = Total = 2850 The expenses of service departments are charged out on a percentage basis as follows: Y Z A B 20% 40% 10% Service Dept A Service Dept B 30% 30% 30% 20% 20% Prepare a statement showing the apportionment of two service department expenses to production departments under Repeated distributed Method

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