Answer any three $(3)$ questions

Part A $[15$ marks$]$

Ready Homes Inc. manufactures and assembles prefabricated Steel and Concrete Structures which are used for the construction of starter Homes. There are three $(3)$ support departments and two $(2)$ production departments. The budgeted costs and the normal activity levels for each department are given below.

$\backslash$table$[[,$Support Departments,,,$],[,\backslash$table$[[$Design and$],[$Personnel$]],\backslash$table$[[$Fabrication$],[$& assembly$]],$Installation$),$Production Departments,,$],[$Overhead costs,$$300,000,$$$3,200,000,$$$4,800,000,,,],[$Square feet,$200,12,000,18,000,160,000,172,000,],[\backslash$table$[[$Number of$],[$employees$]],4,40,32,50,60,],[$Material Cost,$$200,000,$$$1,350,000,$$$1,420,000,5,400,000,$$$8,200,000,],[\backslash$table$[[$Total production$],[$in square meters$]],,,,400,000,600,000,],[$Direct labor cost,,,,,,$]]$

The allocation bases are as follows: Design $-$ Number of Employees; for Fabrication Square feet and for Installation $-$ Material costs. The production department allocates overhear cost to each case based on the budgeted cases produced for each product.

Required

$.$ Using the Step$-$down method, allocate the Design and personnel cost.

$(3$Marks$)$

$.$ Set up the equations that should be solved if the reciprocal method is used to allocate the two$-$remaining support department cost to the production departments. $(3$ Marks$)$

$.$ Determine the total cost per square meter using the reciprocal method of support cost allocation.

$(9$Marks$)$

TURN OVER