QUESTION 2 [25] Multi-Store Limited is a small regional chain of supermarkets in the Northern Cape. The chain manages their accounting per store but in addition they run the Deli, Butchery and Goods sections as separate reporting cost centres. In addition they have two service departments the Finance Department that deals with the financial administration and the Inventory Department that deals with the ordering, delivery and warehousing of goods. They are currently reviewing the profitability and efficiency of the three cost centres and have adopted an Activity-Based-Costing (ABC) approach. The following information has been extracted from their accounting and activity records: The following Overheads are to be apportioned: Cost R Basis of allocation to cost centres Ordering costs 250 000 Number of order issued Goods Received Costs 320 000 Number of Goods Received Notes issued Management and Administration 1 200 Rand value turnover Costs 000 Property costs 850 000 square meters occupied Warehousing Costs Number of Inventory Requests sent to 650 000 warehouse Maintenance Costs 180 000 Number of maintenance requests In addition the Finance Department's costs will be allocated based on the gross cash flows of the departments and the inventory costs based on the total purchases of the year. The direct costs of the Finance Department were R675 000 and the direct costs of the Inventory Department R400 000. The following activities took place during the year Activity Deli Butchery Goods Finance Inventory Total Orders issued 520 370 5895 70 105 6960 Goods Received Notes 610 350 6000 80 100 7140 Turnover R 1.5m R2.1m R10m Nil Nil R13.6m Square meters 500 300 4 100 100 1 000 6 000 Inventory requests 180 1 400 2 500 Nil Nil 4080 Maintenance Requests 500 500 1945 15 40 3000 Gross Cash Flow R2.3m R3.7m R18m Nil Nil R24m Purchases R0.8m R 1.6m R8m Nil Nil R10.4m Required Calculate the total overhead costs that are to be allocated to the Deli, Butchery and Goods retail departments