Problem 48-6 Step-Down Method versus Direct Method; Predetermined Overhead Rates (L04-10, LO4- 11 The Sendai Co., Ltd., of Japan has budgeted costs in its various departments as follows for the coming year: Factory Administration Custodial Services Personnel Maintenance Machining-overhead Assembly-overhead Total cost $ 789,675 96,475 46,860 164,700 645,806 513,984 $2,196,900 The company allocates service department costs to other departments in the order listed below. Department Factory Administration Custodial Services Personnel Maintenance Machining Assembly Square Total Feet of Direct Number of Labor Space Labor- Machine- Employees Hours Occupied Hours Hours - 5,200 11,200 3,100 18 10,100 3,100 49,400 15,400 64 80,000 45,000 126,000 138,000 200,000 15,000 217,000 69,000 270 350,700 86,800 343,000 207,000 96 Machining and Assembly are operating departments, the other departments are service departments. Factory Administration is allocated based on labor-hours; Custodial Services based on square feet occupied; Personnel based on number of employees; and Maintenance based on machine-hours. Required: 1. Allocate service department costs to consuming departments by the step-down method. Then compute predetermined overhead rates Required: 1. Allocate service department costs to consuming departments by the step-down method. Then compute predetermined overhead rates in the operating departments using machine-hours as the allocation base in Machining and direct labor-hours as the allocation base in Assembly 2. Repeat (1) above, this time using the direct method. Again compute predetermined overhead rates in Machining and Assembly. 3. Assume that the company doesn't bother with allocating service department costs but simply computes a single plantwide overhead rate that divides the total overhead costs (both service department and operating department costs) by the total direct labor-hours. Compute the plantwide overhead rate. 4. Suppose a job requires machine and labor time as follows: Machining Department Assembly Department Total hours Machine Hours 220 17 237 Direct Labor- Hours 34 84 118 Using the overhead rates computed in (1), (2), and (3) above, compute the amount of overhead cost that would be assigned to the job if the overhead rates were developed using the step-down method, the direct method, and the plantwide method. Complete this question by entering your answers in the tabs below Required 1 Required 2 Required 3 Required 4 Allocate service department costs to consuming departments by the step-down method. Then compute predetermined overhead rates in the operating departments using machine-hours as the allocation base in Machining and direct labor-hours as the allocation base in Assembly. (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 rates" to 2 decimal places and other final answers to the nearest whole dollar amount.) Show less Personnel Maintenance Machining Assembly Factory Administration $ 789,075 Custodial Services $ 96,475 $ 46,860 $ 104,700 Departmental costs before allocation Allocations: Factory administration Custodial services Personnel Maintenance Total costs after allocation Predetermined overhead rate | Required 1 Required 2 > Using the overhead rates computed in (1), (2), and (3) above, compute the amount of overhead cost that would be assigned to the job if the overhead rates were developed using the step-down method, the direct method, and the plantwide method. Complete this question by entering your answers in the tabs below Required 1 Required 2 Required 3 Required 4 Repeat requirement 1 above, this time using the direct method. Again compute predetermined overhead rates in Machining and Assembly. (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 rates" to 2 decimal places and other final answers to the nearest whole dollar amount.) Machining Assembly Factory Custodial Personnel Administration Services | $ 789,075 $ 96,475 $ 46,860 Maintenance $ 104,700 L L L Departmental costs before allocation Allocations: Factory administration L Custodial services Personnel Maintenance Total costs after allocation Predetermined overhead rate Required 1 Required 3 > Using the overhead rates computed in (1), (2), and (3) above, compute the amount of overhead cost that would be assigned to the job if the overhead rates were developed using the step-down method, the direct method, and the plantwide method. Complete this question by entering your answers in the tabs below Required 1 Required 2 Required 3 Required 4 Assume that the company doesn't bother with allocating service department costs but simply computes a single plantwide overhead rate that divides the total overhead costs (both service department and operating department costs) by the total direct labor-hours. Compute the plantwide overhead rate. (Do not round intermediate calculations. Round your answer to 2 decimal places.) Plantwide overhead rate per DLH Required 1 Required 2 Required 3 Required 4 Using the overhead rates computed in (1), (2), and (3) above, Compute the amount of overhead cost that would be assigned to the job if the overhead rates were developed using the step-down method, the direct method, and the plantwide method. (Do not round intermediate calculations. Round "Predetermined overhead rates" to 2 decimal places and other final answers to the nearest whole dollar amount.) Show lessa Overhead Cost Step-down method Direct method Plantwide method