Top Exhaust Pte Ltd (TEPL) manufactures high quality exhaust systems for cars. The company has two production departments: Bending and Welding. In the Bending Department, the sheet metal is cut and bent into shape, using a series of cutting, stamping and bending machines, and in the Welding Department, the exhaust pipes are welded and packed for shipping.

There are other departments supporting the manufacturing process: Machinery Maintenance, Material Handling and Quality Control. The budgeted overhead costs and other relevant information for the respective departments for the new financial year are as follows:

	Bending	Welding	Machinery Maintenance	Material Handling	Quality control
Overhead cost	$800,000	$400,000	$250,000	$230,000	$350,000
Machine hours	30,000	4,000			5,000
Labour hours	1,000	10,000	2,000	800	1,000

An analysis of the services provided by the support departments indicates that their costs should be apportioned accordingly as per below:

Provider of service	Bending	Welding	Equipment Maintenance	Material Handling	Quality Control
Machinery Maintenance	40%	50%	-	5%	5%
Material Handling	44%	50%	-	-	6%
Quality Control	75%	25%	-	-	-

Required: (Show all workings clearly and round all solutions to 2 decimal places)

(a) Compute the total overhead costs for the Bending Department and Welding Department after the re-apportionment of the costs from the support departments. (16 marks)

(b) Compute the overhead absorption rates for the two production departments. (4 marks)

(c) With the overhead absorption rates calculated in (b), calculate the total costs for a job number #2114, which is expected to commence early next financial year, assuming that it is expected to incur the following direct costs:

Direct materials $6,400

Direct labour $5,500

	Bending	Welding
Machine Hours	300	5
Labour hours	10	20

(7 marks)

(d) Assume that at the end of the next financial year, the actual fixed overhead of the Bending Department was $1,100,000 and that the actual machine hours were 30,200 and the actual labour hours were 1,100. Determine the under-applied or over-applied overhead for the year for the Bending Department. Prepare a journal entry to close any balance in the Manufacturing Overhead account to Cost of Goods Sold. (7 marks)

Thank you very much <3