Question 1 (Total 17 marks) Freedom Company has two support departments and two production departments. Budgeted manufacturing overhead costs and budgeted activity in the departments for the current year are below: Support Departments Production Departments Finance Human Resource Cutting Sanding Departmental costs $100,000 $195,000 $600,000 $800,000 Square metres 500 1,000 10,000 9,000 Number of employees 20 40 30 20 Machine hours 100,000 60,000 Labour Hours 20,000 20,000 20,000 10,000 The company uses the sequential (step) method to allocate support department costs to production departments. The overhead cost of the finance department is allocated first based on square metres occupied. The overhead cost of the human resource department is allocated based on the number of employees. Predetermined overhead rates in both production departments are based on labour hours. The product Freedom Company produces requires 2 labour hours per unit in the cutting department and 1 labour hour per unit in the sanding department. Prime cost for the product is $180 per unit. Freedom Company prices its product at full production cost plus 50% mark-up. Required: 1. Allocate the support departments overhead costs to the production departments and calculate the total budgeted manufacturing overhead cost for each production department. 2. Calculate the predetermined manufacturing overhead rate for the cutting department. 3. Calculate the predetermined manufacturing overhead rate for the sanding department. 4. Should actual or budgeted support department overhead costs be allocated to the production departments? Provide detailed explanations. 5. Calculate the per unit price of the product produced by Freedom Company. (8 + 2 + 2 + 2.5 + 2.5 = 17 marks) Start typing your answer here