Bowden Outfitters manufactures a complete line of running shoes. The firm has three manufacturing departments: Molding, Component, and Assembly. There are also two service departments: Power and Maintenance.

The soles of the shoes are manufactured in the Molding Department. The tops of the shoes are manufactured in the Component Department. The shoes are then completed in the Assembly Department. Varying amounts of materials, time, and effort are required for each of the shoe models. The Power Department and Maintenance Department provide services to the three manufacturing departments.

Bowden has always used a plantwide overhead rate. Direct-labor hours are used to assign overhead to products. The predetermined overhead rate is calculated by dividing the company's total estimated overhead by the total estimated direct-labor hours to be worked in the three manufacturing departments.

Christine Macguire, director of cost management, has recommended that Bowden use departmental overhead rates. The planned operating costs and expected levels of activity for the coming year have been developed by Macguire and are presented by department in the following schedules. (All numbers are in thousands.)

Service Departments Power Maintenance Departmental activity measures: Maximum capacity 1,000 kilowatt-hours Adjustable Estimated usage for the coming year 800 kilowatt-hours 125 hours Departmental costs: Materials and supplies $ 6,000 $2,500 Variable labor 1,400 2,250 Fixed overhead 13,000 1,250 Total service department costs $20,400 $6,000 Manufacturing Departments Molding Component Assembly Department activity measures: Direct-labor hours 1,500 3,000 2,500 Machine hours 1,875 1,125 -0- Departmental costs: Direct material $12,400 $30.000 $ 1,250 Direct labor 3,500 20.000 12,000 Variable overhead 4,500 11,000 20,500 Fixed overhead 18,500 7,200 7,100 Total departmental costs $38,900 $68,200 $40,850 Use of service departments: Maintenance: Estimated usage in labor 90 25 10 hours for the coming year Power (in kilowatt-hours): Estimated usage for the 360 320 120 coming year Maximum allotted capacity 500 350 150