2. ABC Manufacturing absorbs overhead in products through departmentalization technique. It has three production departments (cutting, molding and finishing) and two service departments (human resources and information systems). To compute departmental rate. ABC uses machine hours as allocation base. However, for re-apportionment purpose, ABC uses number of staffs and system usage time as allocation bases for human resources (HR) and information systems (15) departments respectively. Related information is given below: Production Departments Service Departments Cutting Molding Finishing HR Detail Budgeted Overhead Cost Machine Hours IS 300,000 600,000 800,000 400,000 400,000 8,000 6,000 4,000 Number of staff's 400 System usage time (in hour) 7,000 300 4,000 200 5,000 100 4,000 Required: a) Allocate service department costs to production departments assuming that ABC applies simultaneous equation method in re-apportionment. (4 marks) b) How much of the overhead costs will be absorbed in Product A if it consumes 50 machine hours from Cutting and 30 machine hours from Finishing Department. (I mark)