20,000 Clarendon, Inc. has two production departments, machining and assembly. James Irving, the manager of the assembly department, has noted a concern about the Indirect costs allocated to his department, which, based on direct labor hours, seemn excessive. He argues that his department is only half the size (in square footage used) of the machining department and uses a small portion of the engineering services and yet he is allocating nearly half of the Indirect costs provided by engineering services and occupancy costs. Mr.Irving anges that adopting activity based costing (ABC), and using multiple cost drivers would more fairly divide the costs. Assume this data is collected by Mr. Irving Machining Department Assembly Department Total Sguare feet occupied 40,000 60,000 ft. Total engineering hours 4,000 1,000 5,000 hours Direct lahor hours 5.700 5,500 11,200 hours Occupancy costs $185.000 Engineering costs $150,000 Clarendon changes to the ABC system recommended how much would indirect costs change in Mr. Irving's department