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Case 4B-7 Step-Down Method versus Direct Method ILO4-10, LO4-11] This is really an odd situation said Jim Carter, general manager of Highland Publishing Company. "We get most of the jobs we bid on that require a lot of press time in the Printing Department, yet profits on those jobs are never as high as they ought to be. On the other hand, we lose most of the jobs we bid on that require a lot of time in the Binding Department. I would be inclined to think that the problem is with our overhead rates, but we're already computing separate overhead rates for each department. So what else could be wrong? Highland Publishing Company is a large organization that offers a variety of printing and bi 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 (For each service department, use the allocation base that provides the best measure of service provided, as discussed in the chapter.) Square Feet Direct Total of Space Number of Machine- Labor. Occupied Employees Department Labor-Hours Hours Hours Personnel 16,600 12,300 22 Custodial Services 9,000 3,700 50 14,600 Maintenance 10,700 69 18,000 Printing 30,800 40,300 104 163,000 107,000 76,000 Binding 20,400 307 46,000 178,000 87,400 552 209,000 94,000 Budgeted overhead costs in each department for the current year are shown below: Personnel 340,000 65,500 Custodial Services Maintenance 93,700 Printing 412,000 168,000 Binding Total budgeted cost $1,079,200