The maintenance department of a firm has fixed costs of $60,000$ and variable costs of $12$ per maintenance hour supplied to other divisions. The maintenance department expects to supply $1,200$ hours of maintenance during the coming year.

$($a$)$ What is the application rate per maintenance hour supplied?

$(3$ marks$)$

$($b$)$ Briefly explain the main reasons for cost allocation.

$(5$ marks$)$

$($Total $8$ marks$)$

A laptop company is having problems with the hard drive for its new laptop. A particular part fails about $2$ per cent of the time. It costs $150$ each time to replace the part and to deal with customer dissatisfaction. The company could redesign the computer and leave out the part for $45,000$ or perform extensive inspections on the part that would cost $1\mathrm{.}50$ per computer. What should the company do$,$ if it plans to make $40,000$ computers during the coming year, before the computer becomes obsolete? Your answer should include rationale.

$($Total $8$ marks$)$