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Sun Pottery Sdn$.$ Bhd$.$ is divided into two operating departments: Pottery and Retail and the departmental overhead rates for both departments are based on direct labour hours. The Pottery Department employs $50$ people and the Retail Department employs $20$ people. Each person in these two departments works for $2,200$ hours per year. The company also has two support departments: Power Department and General Factory Department and the company allocates both department costs to each operating department. Power costs are allocated on the basis of the number of machine hours and general factory costs on the basis of square footage. No effort is made to separate fixed and variable costs, however, only budgeted costs are allocated. Allocations for the coming year are based on the following data: Power General factory Pottery Retail Overhead costs $($RM$)160,000170,00098,00060,000$ Machine hours $2,0001,0006,9003,100$ Square footage $2,0001,7004,0006,000$ Required: $($i$)$ Calculate the overhead rates per machine hour for the Pottery Department and per square foot for the Retail Department using the sequential method. The support departments are ranked in order of highest cost to lowest costs. $($ii$)$ Estimate the overhead cost of a product using $3$ machine hours in the Pottery Department and $4$ square foot in the Retail Department using the overhead rates estimated in $($i$).($iii$)$ In addition to the sequential method, overhead cost can be allocated using the direct and reciprocal method. Which method would you recommend? Justify your answer.

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