2.14 marks) The Central Valley Company has prepared department overhead budgets for budgeted-volume levels before allocations as follows Support departments Balding and grounds Personnel General plant administration Cafeteria operating loss Starensom Total for support departments Operating departments Machining Assembly Total for operating departments Total for support and operating departments $45,000 $300 $37,320 5970 $9,990 $93,580 $36.000 $46,000 $82.600 $176,180 Department Labor-Hours Number of Employees Management has decided that the most appropriate inventory costs are achieved by using individual department verhead es. These rates are developed after sport-department costs are allocated to operating departments Bases for allocation are to be selected from the following Direct Manufacturing Square Feet of Floor Space Occupied Indirect Manufacturing Labor-Hours Number of Requisitio Building and 0 0. 0 Personnel asi used is number of D 0 2300 B General pla B 12,000 0 Catatia operating 0 10 3,000 3,000 0 6000 2000 Mashining 8.000 55 22.000 33,000 36000 Ably 32,000 140 202.5 26,000 Toul 2400000 440000 10000 Required: (1) Using the step-down method, allocate support-department costs. Develop overhead rates per direct manufacturing labor-hour for machining and assembly. Allocate the costs of the support departments in the order given in this problem. Use the allocation base for each support department you think is most appropriate. (2) Using the direct method, rework requirement 1. (3) Based on the following information about two jobs, determine the total overhead costs for cach job by using rates developed in (a) requirement 1 and (b) requirement 2. Job 88 Job 89 Direct Manufacturing Labor-Hours Machining 17 9 Assembly 7 20 (4) The company evaluates the performance of the operating department managers based on how well they managed their total costs, including allocated costs. As the manager of the Machining Department, which allocation method would you prefer from the results obtained in requirements I and 2? Explain. Required: (1) Using the step-down method, allocate support-department costs. Develop overhead rates per direct manufacturing labor-hour for machining and assembly. Allocate the costs of the support departments in the order given in this problem. Use the allocation base for each support department you think is most appropriate. (2) Using the direct method, rework requirement 1. (3) Based on the following information about two jobs, determine the total overhead costs for each job by using rates developed in (a) requirement 1 and (b) requirement 2. Job 881 Job 89 Direct Manufacturing Labor-Hours Machining Assembly 7 20 17 9 (4) The company evaluates the performance of the operating department managers based on how well they managed their total costs, including allocated costs. As the manager of the Machining Department, which allocation method would you prefer from the results obtained in requirements I and 2? Explain. Problem 2 (14 marks) The Central Valley Company has prepared department overhead budgets for budgeted-volume levels before allocations na follow Support departments: Balding and grounds Personnel General plant administration Cafeteria operating loss Storeroom Total for support departments Operating departments Machining Assembly Total for operating departments Total fi sport and operating departments $45,000 $300 $37,320 5970 $9,990 $93,580 $36,000 546000 582.600 $176.180 Management has decided that the most appropriate inventory costs are achieved by using individual department overhead rates. These rates are developed after support-department costs are allocated to operating departments Bases for allocation are the selected from the following Direct Manufacturing Number of Employees Square Feet of Floor Space Occupied Indirect Manufacturing Laber-Hear Number of Requisitions Department Labur-Hours Building and Ponncl Ba used in number of D O 2,500 0 0 General plant administration Cafeteria D 40 12,000 " D 10 5,000 3,000 0 S 5000 2,000 Machining 55 22.000 13000 6,000 $23000 140 200-500 26,000 4,000 40.000 250 25000 44.000 10,000 15-30 Alge Support department Building a Personnal General plait adninistration Calteria operating loss Sunroom Operating depar Machining Asembly Total for support and spring dep $4,000 300 37339 970 The Cecal Vary Company $600 SUL180 Masagement has decided that the most appropriate invery costs are achieved by using individual department overhead rates. These rates are develpet atur support department casts are allocated to Bass for afecation are to be selected run the flowing Direct Manufacturing Ruber of flor Space Mandaring Number of Building and grounds Pers Machining Asently Laber Hosepistim 10 2,500 12000 1,000 000 2000 6.000 75,000 thing the step-dose method acte spot-department cods Develop overhead retes per direct in the orders probien. Uve the scan ass each support department you ink is Using the tr 3. Being information about we dem the tutal head cor each by Direct Mag La