QUESTION 2 Essential Parts Ltd is a sub-contractor in the car industry. The firm has two operating departments: the machining department and the assembly department. The firm also has two support

departments: materials procurement and general factory support. The usage of these two support departments' output for 2019 was as follows: Support departments Operating departments General Factory Machining Assembly Support Department Department Materials Procurement User of Services Budgeted manufacturing overhead costs before an inter-department cost allocations Support work supplied by: Materials Procurement General Factory Support 900,000 0% 40% 750,000 5% 0% 1,000,000 4,000,000 50% 50% Required a) Use the direct method to allocate the budgeted costs of the Materials Procurement Department and General Factory Support Department to the Machine Centre and Assembly Centre. (4 Marks) b) Use the step down method to allocate budgeted costs of the Materials Procurement Department and General Factory Support Department to the Machine Centre and Assembly Centre. (8 Marks) c) Use the reciprocal method to allocate the budgeted costs of the Materials Procurement Department and General Factory Support Department to the Machining Department and Assembly Department. (12 Marks) 45% 10%/nBMAN21040 d) Explain which support department cost allocation method best meets the purpose of allocating indirect costs with the cause-effect logic reasonably intact in this particular case and how this may necessitate trade-offs with the other criteria for cost allocations? Please also discuss the circumstances under which your response to this question would be different. (6 Marks)