lems 34 Ive a tions in errors Gificant. or use mal cu- ze Departmental Cost Allocation; Outsourcing Marin Company produces two software products (Cloud-X and Cloud-Y) in two separate departments (A and B). These products are highly regarded network maintenance programs. Cloud-X is used for small networks and Cloud-Y is used for large networks. Marin is known for the quality of its products and its ability to meet dates promised for software upgrades. Department A produces Cloud-X, and department B produces Cloud-Y. The production depart- ments are supported by two support departments, systems design and programming services. The sources and uses of the support department time are summarized as follows: From Design Programming Department A 5,000 1,000 400 600 Total Labor Hours Design Programming Department B 9,000 1,000 15,000 2,000 The costs in the two service departments are as follows: Design Programming Labor and materials (all variable) $50,000 $36,000 Depreciation and other fixed costs 40,000 4,000 Total $90,000 $40,000 Required 1. Determine the total support costs allocated to each of the producing departments using (a) the direct method, (b) the step method (design department goes first), and (c) the reciprocal method? 2. The company is considering outsourcing programming services to DDB Services Inc. for $25 per hour. Should Marin do this