estion 3 (2.5 points) Alden Co. makes high quality Oxford shoes and Chelsea boots. It has two service departments: Marketing and Customer. Marketing department costs of $300,000 are allocated on the basis of budgeted campaign hours. Sales department costs of $120,000 are allocated on the basis of budgeted sales volume. The costs of operating departments Oxford and Chelsea are $250,000 and $125,000, respectively. Data on budgeted machine hours and budgeted sales volume are as follows: Support Departments Production Departments Marketing Customer Oxford Chelsea Budgeted Costs $300,000 $120,000 $250,000 $125,000 Budgeted Campaign Hours NA 500 hrs 1500 hrs 1000 hrs Budgeted Sales Volume 20 pairs NA 4000 pairs 1000 pairs If using the step-down method to allocate the service cost of Marketing to Chelsea, which of the following is correct? Some of Customer's costs should be allocated to Marketing first. Then, the updated cost of Marketing is allocated to Chelsea based on the weight of campaign hours. Marketing's budgeted costs should be allocated to Chelsea, based on Chelsea's weight of campaign hours between two departments: Chelsea and Oxford. Marketing's budgeted costs should be allocated to Chelsea, based on Chelsea's weight of campaign hours among three departments: Chelsea, Oxford, and Customer. Some of Marketing's costs should be allocated to Customer first. Then, the budgeted cost of Customer is allocated back to Marketing. Lastly, the updated cost of Marketing is allocated to Chelsea based on the weight of campaign hours. Previous Page Next Page Page 3 of 23