3.21 Direct method using estimated costs, benchmarking LOG Devon Ltd allocates support department costs using the direct method and estimated costs. The support department costs are budgeted at $88 000 for department A, $63 000 for department B and $40 000 for department C. These costs are allocated using the proportion of total cost the firm would pay to an outside service provider. operating Casting Machine 6,000 2,000 4,000 10,000 Support Dept. A Dept. B Dept. C Direct costs $88,000 $63,000 $40,000 Labour hours Machine hours Costs if support services were purchased outside: Department A Department B Department C $50,000 $40,000 $20,000 $60,000 $30,000 $30,000 Required (a) Allocate budgeted support department costs using the direct method, first using labour hours and then with the outside cost proportions as the allocation bases. (b) Could Devon Ltd use the cost of purchasing outside as an efficiency benchmark for the cost of both the support departments and the operating departments? List several advantages and disadvantages of this approach