Highland Publishing Company is a large organization that offers a variety of printing and binding work. The Printing and Binding departments are supported by three service departments. The costs of these service departments are allocated to other departments in the order listed below. The Personnel cost is allocated based on number of employees. The Custodial Services cost is allocated based on square feet of space occupied and the Maintenance cost is allocated based on machine-hours. Machine- Hours Direct Labor- Hours Department Personnel Custodial Services Maintenance Printing Binding Total Labor- Hours 16,700 8,200 14, 200 30,300 106,000 175,400 Square Feet of Space Occupied 12,100 3,400 10,200 40,200 20,700 86,600 Number of Employees 22 42 64 106 303 537 163,000 47,000 210,000 19,000 79,000 98,000 Budgeted overhead costs in each department for the current year are shown below: $ Personnel Custodial Services Maintenance Printing Binding Total budgeted cost 330,000 65,800 93,600 417,000 167,000 1,073,400 Because its simplicity, the company has always used the direct method to allocate servic departments. department costs to the two operating Required: 1. 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. 2. Repeat (1) above, this time using the direct method. Again compute predetermined overhead rates in the Printing and Binding departments. 3. Assume that during the current year the company bids on a job that requires machine and labor time as follows: Printing Department Binding Department Total hours Machine-Hours 2,100 700 2,800 Direct Labor-Hours 1,400 13,400 14,800 Printing Department Binding Department Total hours Machine-Hours 2,100 700 2,800 Direct Labor-Hours 1,400 13,400 14,800 a. Determine the amount of overhead cost that would be assigned to the job if the company used the overhead rates developed in (1) above. Then determine the amount of overhead cost that would be assigned to the job if the company used the overhead rates developed in (2) above. Complete this question by entering your answers in the tabs below. Req 1 Reg 2 Req 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. (Please enter allocations from a department as negative and allocations to a department as positive. The line should add across to zero. Do not round intermediate calculations. Round "Predetermined overhead rate" to 2 decimal places and rest of the answers to the nearest whole dollar amount.) Show less Personnel Custodial Maintenance Printing Services Binding $ 330,000 $ 65,800 $ 93,600 $ 417,000 $ 167,000 Departmental costs before allocations Allocation: Personnel Custodial services Maintenance Total costs after allocations Predetermined overhead rate 330,000 65,800 93,600 417,000 167,000 Req 1 Req 2 > a. Determine the amount of overhead cost that would be assigned to the job if the company used the overhead rates developed in (1) above. Then determine the amount of overhead cost that would be assigned to the job if the company used the overhead rates developed in (2) above. Complete this question by entering your answers in the tabs below. Reg 1 Reg 2 Req Repeat requirement 1 above, this time using the direct method. Again compute predetermined overhead rates in the Printing and Binding departments. (Please enter allocations from a department as negative and allocations to a department as positive. The line should add across to zero. Do not round intermediate calculations. Round "Predetermined overhead rate" to 2 decimal places and rest of the answers to the nearest whole dollar amount.) Show less Personnel Custodial Maintenance Printing Binding Services $ 330,000 $ 65,800 $ 93,600 $ 417,000 $ 167,000 Departmental costs before allocations Allocation: Personnel Custodial services Maintenance Total costs after allocations Predetermined overhead rate 330,000 65,800 93,600 417,000 167,000 a. Determine the amount of overhead cost that would be assigned to the job if the company used the overhead rates developed in (1) above. Then determine the amount of overhead cost that would be assigned to the job if the company used the overhead rates developed in (2) above. Complete this question by entering your answers in the tabs below. Reg 1 Reg 2 Req Determine the amount of overhead cost that would be assigned to the job if the company used the overhead rates developed in requirement 1 above. Then determine the amount of overhead cost that would be assigned to the job if the company used the overhead rates developed in requirement 2 above. (Do not round intermediate calculations. Round "Predetermined overhead rates" to 2 decimal places and other final answers to the nearest whole dollar amount.) Show less A Total Overhead Cost Step-down method Direct method
