3 The Central Valley Company has prepared department overhead budgets for budgeted-volume levels before allocations as follows: Support departments: Building and grounds Personnel General plant administration Cafeteria operating loss Storeroom Total for support departments Operating departments: Machining Assembly Total for operating departments Total for support and operating departments $45,000 $300 $37,320 $970 $9,990 $93,580 $36,000 $46,000 $82,600 $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 to be selected from the following Direct Department Manufacturing Labor-Hours Number of Employees Square Feet of Floor Space Indirect Manufacturing Labor-Hours Number of Requisitions Occupied Building and 0 0 0 0 0 grounds Personnel (Basis used is number 0 0 2.500 0 0 of employees) General plant 0 administration 40 12,000 D Cafeteria O 10 5,000 3,000 0 operating loss Storeroom 0. 5 6,000 2,000 0 Machining 8,000 55 22.000 13,000 6,000 Assembly 32,000 140 202,500 26,000 4,000 Total 40,000 250 250,000 44,000 10,000 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 88 Job 891 Direct Manufacturing Labor-Hours Machining Assembly 20 17 9 (4) The company evaluates the performance of the operating department managers on the basis of 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 1 and 2? Explain