Problem 4B-6 Step-Down Method versus Direct Method; Predetermined Overhead Rates [LO04-10, LO4 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 $911,3e0 132,466 38,734 83,928 1,327,132 436,848 The company allocates service department costs to other departments in the order listed below Square Total Feet of Direct Number of Labor Space Labor- Machine Employees Hours Occupied Hours Hours Department Factory Administration Custodial Services Personnel Maintenance Machining Assembly 13,599 7,300 4,500 14,266 12,286 49,000 15,200 32 52 7e,966 7e,900 75,889 18e,968 21e,900 20,e00 171,88e 36,908 358,508 135,490 246, B8e 216,96e 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 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: Direct Machine Labor- Hours 226 28 246 Hours 28 Machining Department Assembly Department Total hours 183 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