BE-318 question Dunelm produces a product and has two production departments (Domestic and International) and two service departments (Administration and Inspection). Administration costs are allocated on the basis of employees and inspection costs are allocated on the basis of number of inspections. The following data is available: International Administration Inspection Department costs () Employees (number) Inspections (number) Domestic 624 000 30 1 440 000 72 240 000 96 000 16 14 000 32 000 16 000 Required 1. ALLOCATE the cost of the two service departments to the production departments using the direct method. Show your workings. 2. ALLOCATE the cost of the two service departments to the production departments using the step method. State any assumptions you make. Show your workings. 3. EXPLAIN which method you recommend Dunelm to use to allocate the service department costs.