Question
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,
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)
hi I need detailed explanation with question (a) with ans! thank you!
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