P15-30 (similar to) Question Help The Heightened Hill Company has prepared department overhead budgets for budgeted-volume levels before allocations as follows: (Click the icon to view the department overhead budgets.) 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: (Click the icon to view the data.) Read the requirements. * Requirement 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. Begin by selecting the allocation base for each support department. Support Department Building and grounds Personnel General plant administration Cafeteria: operating loss Storeroom Allocation Base Support departments: Building and grounds Personnel General plant administration Cafeteria: Operating loss Storeroom Operating departments: Machining Assembly Total for support and operating departments $ 51,000 325 35,200 1,030 3,295 $ 90,850 $ 36,000 50,000 86,000 $ 176,850 Department Building and grounds Personnel General plant administration Direct Manufacturing Labor-Hours Number of Square Feet of Floor Space Indirect Manufacturing Number of Employees Occupied Labor-Hours Requisitions 0 0 0 0 0 0 2,500 0 0 40 4,000 0 Cafeteria: operating loss 0 10 2,000 2,000 OOO 0 0 0 0 Storeroom 0 5 4,000 1,000 0 Machining 4,000 55 33,000 7,000 3,000 12,000 140 254,500 14,000 1,000 Assembly 16,000 250 300,000 24,000 4,000 Total "Basis used is number of employees 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. Direct Manufacturing Labor-Hours Job 88 Job 89 Machining 20 3 Assembly 1 21 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