ASSIGNMENT MATERIAL 573 15-30 Allocating costs of support departinents; step-down and direct methods. The Central Valley Company has prepared department overhead budgets for budgeted-volume levels before allocations as follows: Support departments: Building and grounds $10,000 Personnel 000 General plant administration 26,090 Cafeteria: operating loss Storeroom 2,670 41,400 Operating departments: Machining $34,700 Assembly 48,900 83,600 Total for support and operating departments $125,000 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 Square Feet of Manufacturing Number of Floor Space Manufacturing Number of Department Labor Hours Employee Occupied Labor-Hours Requisitions Building and grounds Personnel@ 2,000 General plant administration Cafeteria: operating loss Storeroom Machining Assembl 50,000 Tota 100,000 Basis used is number of employees 1. Using the step-dawn method, allocate support department costs. Develop overhead rates per direct manu Required facturing labor-hour formachiningand assembly. Allocate the costs ofthesupport departments in the order given in this problem. Use the allocation base for each support department yau think is most appropriate 2. Using the direct method, rewark requirement 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 Direct Manufacturing Labor Hours Machining Assembly Job 88 Job 89 4. The company evaluates the performance of the operating department managers on the basis of howweli 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 Support-department cost allocations; single-department cost pools; direct, step-down, and 15 reciprocal methods. The Manes Company has two products. Product1 is manufactured entirely in department X. Product2is manufactured entirely in department Y To produce these two products, the Manes Company has two support departments: A (a materials handling department) and B (a power-generating department) An analysis of the work done by departments A and B in a typical period follows Used B Supplied By 00 250 50 500 00 400