Q2: Cost Allocation (7.5 Marks) Smart Choices, a plastic storage manufacturer, allocates advertising expenses to its two departments, Lifestyle and Storage Solutions. It uses sales as the cost driver. For the current year the sales for Lifestyle are estimated to be $450 000 and for Storage Solutions $900 000. The total advertising expenses are budgeted at $110 000. Required: 1. Calculate the budgeted/estimated indirect cost (allocation) rate for the advertising expenses. Please show all workings. (3.5 marks) 2. There are three different cost allocation methods that an organisation can use; direct, step-down and reciprocal. What would you consider when recommending which method an organisation should use? (4 marks)