Pre-Fabricators Inc manufacturers and assembles prefabricated concrete and green heart homes for the lower to middle income housing market. There are three support departments and two production departments. The budgeted costs and the normal activity levels for each department are given below.

Support Departments Production Departments

	Design and Personnel	Fabrication & assembly	Installation	Concrete	Green Heart
Overhead costs	$150,000	$3,00,000	$1,820,000
Square feet	200	3600	2,400	60,000	72,000
Number of employees	3	11	6	18	14
Material Cost	$45,000	$450,000	$720,000	2,000,000	$1,800,000
Homes (estimated production)				40	60
Prime manufacturing cost per home				$78,000	$62,500

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

Required

1). Using the step-down method, allocate the Design cost.

2). 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). Determine the cost per home using the reciprocal method of support cost allocation. Please help me understand this question.