Please answer or give some opinions on questions 3, 4 and 5 only. Thank you so much. PLANTWIDE, DEPARTMENT, AND ABC INDIRECT COST RATES.Roadster Company (RC) designs and produces automotive parts. In 2020, the actual variablemanufacturing overhead is $280,000. RC's simple costing system allocates variablemanufacturing overhead to its three customers based on machine hours and prices its contractsbased on full costs. One of its customers has regularly complained of being chargednoncompetitive prices, so RC's controller Matthew Draper realizes that it is time to examine theconsumption of overhead resources more closely. He knows that there are three maindepartments that consume overhead resources: design, production, and engineering. Interviewswith the department personnel and examination of time records yield the following detailedinformation:1HomeAInsert Page Layout FormulasB2 Department3 Design4 Production5 Engineering6 TotalCost DriverCAD-design-hoursEngineering-hoursMachine-hoursDataсReviewManufacturingOverhead in 2020$ 35,00025,000220,000$280,000ViewD ▬▬▬EFUsage of Cost Drivers by CustomerContractCaesarMotorsSouthernMotors1501303002501003,700JupiterAuto1002701,000 Required1. Compute the manufacturing overhead allocated to each customer in 2020 using thesimple costing system that uses machine hours as the allocation base.2. Compute the manufacturing overhead allocated to each customer in 2020 usingdepartment-based manufacturing overhead rates.3. Comment on your answers in requirements 1 and 2. Which customer do you think wascomplaining about being overcharged in the simple system? If the new department-basedrates are used to price contracts, which customer(s) will be unhappy? How would yourespond to these concerns?4. How else might RC use the information available from its department-by-departmentanalysis of manufacturing overhead costs?5. RC's managers are wondering if they should further refine the department-by-departmentcosting system into an ABC system by identifying different activities within each department.Under what conditions would it not be worthwhile to further refine the department costingsystem into an ABC system?

Cost allocation is one of the processes in the cost system which allocated different overhead costs…

Required 1. Compute the manufacturing overhead allocated to each customer in 2020 using the simple costing system that uses machine hours as the allocation base. 2. Compute the manufacturing overhead allocated to each customer in 2020 using department-based manufacturing overhead rates. 3. Comment on your answers in requirements 1 and 2. Which customer do you think was complaining about being overcharged in the simple system? If the new department-based rates are used to price contracts, which customer(s) will be unhappy? How would you respond to these concerns? 4. How else might RC use the information available from its department-by-department analysis of manufacturing overhead costs? 5. RC's managers are wondering if they should further refine the department-by-department costing system into an ABC system by identifying different activities within each department. Under what conditions would it not be worthwhile to further refine the department costing system into an ABC system?