Activity 5 Question 1 (Adapted from July 2015 Question 2) DL Ltd ("DL) manufactures and distributes products in the cosmetic industry. DL has two operating departments - I and II, and three support departments - Administration, Marketing, and Maintenance. The Maintenance department allocates costs using budgeted total maintenance hours. The Administration and Marketing departments use the number of labour hours incurred. The budgeted costs for Admin, Marketing, and Maintenance departments are $168,000, $336,000, and $720,000 respectively. The budgeted manufacturing costs for departments I and II are $900,000 and $1,020,000 respectively. The following table summarizes the support services usage by each department. Operating Support I IT Admin Marketing Maintenance Administration (in labour hours) 3,200 4.000 800 800 Marketing (in labour hours) 4.800 5.600 800 0 Maintenance (in maintenance hours) 12,000 9,600 1.600 800 (a) If DL uses the step-down method to allocate support department costs, which order of departments would you propose for cost allocation? Explain. (b) Ignore your answer to part (a). Assume that support departments' costs are allocated in the order of Engineering, then Administration, and finally Marketing; calculate the new total cost of Marketing department after using the step-down method