Question 4 (adapted from July 2020 Question 1) Head Search Ltd is a small recruitment agency firm which has two service departments, IT and Administration (Admin), as well as three operating departments, I, II and III providing recruitment services for senior management positions, technical vacancies, and administration vacancies, respectively. Departmental costs for the IT Department are allocated based on payroll costs while for Admin Department it is allocated based on number of employees. The following information relates to the current year: Resources IT Admin I II III Total Direct dept costs $36.000 $18,000 $400.000 $700,000 $300.000 Department payroll costs $30,000 $16,000 $300,000 $450,000 $150.000 Number of employees 2. 2 10 15 5 The Total Direct department costs are inclusive of the department payroll costs. Departmental pre- determined overhead rates are based on number of hours worked by employees. Each employee works 40 hours per week over a 50-week annual period. Required: (a) (i) Use the direct method of allocating the service department costs to compute the total departmental costs for all three operating departments. (ii) Compute the departmental pre-determined overhead rates for each of the three departments. (Round your final answers to two decimal places.) (b) (i) State the order of the allocation of the service departments if the step down method is used. (ii) Calculate the total departmental costs for all three operating departments, using the step down method beginning with the IT Department. (c) Comment on the results of (a) (i) and (b) (ii). State which allocation method would you recommend