Budgeted overhead costs in each department for the current year are shown below:

Because of its simplicity, the company has always used the direct method to allocate service department costs to the two operating

departments.

Required:

Using the step$-$down method, allocate the service department costs to the consuming departments. Then compute predetermined

overhead rates in the two operating departments. Use machine$-$hours as the allocation base in the Printing Department and direct

labor$-$hours as the allocation base in the Binding Department.

Repeat $(1)$ above, this time using the direct method. Again compute predetermined overhead rates in the Printing and Binding

departments.

Assume during the current year the company bids on a job requiring machine and labor time as follows:

a$.$ Calculate the overhead cost assigned to the job if the company used the overhead rates developed in $(1)$ above. Then calculate

the overhead cost assianed to the iob if the comnanv used the overhead rates develoned in $(2)$ above.