16-34 Support-department cost allocations; single-department cost pools; direct, step-down, and recipro- cal methods. Sportz, Inc., manufactures athletic shoes and athletic clothing for both amateur and professional athletes. The company has two product lines (clothing and shoes), which are produced in separate manufacturing facilities; however, both manufacturing facilities share the same support services for information technology and human resources. The following shows total costs for each manufacturing facility and for each support department. Total Costs by Department Variable Costs Fixed Costs (in thousands) Information technology (IT) $ 600 $ 2,000 $ 2,600 Human resources (HR) $ 400 $ 1,000 $ 1,400 Clothing $2,500 $ 8,000 $10,500 Shoes $3,000 $ 4,500 $ 7,500 Total costs $6,500 $15,500 $22,000 The total costs of the support departments (IT and HR) are allocated to the production departments (clothing and shoes) using a single rate based on the following: Information technology: Number of IT labor-hours worked by department Human resources: Number of employees supported by department Data on the bases, by department, are given as follows: Department IT Hours Used Number of Employees Clothing 5,040 220 Shoes 3,960 88 Information technology 92 Human resources 3,000 1. What are the total costs of the production departments (clothing and shoes) after the support depart- ment costs of information technology and human resources have been allocated using (a) the direct method, (b) the step-down method (allocate information technology first), (c) the step-down method (allocate human resources first), and (d) the reciprocal method? 2. Assume that all of the work of the IT department could be outsourced to an independent company for $97.50 per hour. If Sportz no longer operated its own IT department, 30% of the fixed costs of the IT department could be eliminated. Should Sportz outsource its IT services?4-22 Actual coating. nonnal coating. accounting lor manufacturing overhead. Carolin Chemicals pro- duces a range of chemical products for industries on getting bulk orders. It uses a job-costing system to calculate the cost of a particular job. Materials and labors used in the manufacturing process are direct in nature, but manufacturing overhead is allocated to different jobs using direct manufacturing labor costs. Carolin provides the following information: Budget form neural Results for 2021 Direct material costs $2,750,000 $3,000,000 Direct manufacturing labor costs 1,0300]! 2.250.000 Manufacturing overhead costs 3,294,!!!) 3.180.000 . Compute the actual and budgeted manufacturing overhead rates for 2021. 2. During March. the iob-coat records for Job 635 contained the following information: Direct materials used $3.5m Direct manufacturing labor costs $51,000 Compute the cost of Job 635 using (el actual costing and [bi normal costing. 3. At the end of 2021, compute the under- or overallocated manufacturing overhead under normal cost- ing. Why is there no under- or overallocated overhead under actual costing? it Why might managers at Carolin Chemicals prefertc use normal costing