Problem 4B-6 Step-Down Method versus Direct Method; Predetermined Overhead Rates (L04-10, L04- 117 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 $ 911,300 132,466 38,734 83,920 1,327,132 436, 848 $2,930,400 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 32 13,500 7,300 4,500 14 14,200 12,200 52 49,000 15, 200 88 70,000 70,000 75,000 180,000 32 210,000 20,000 171,000 36,000 333 350,500 135, 400 246,000 216,000 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: Machining Department Assembly Department Total hours Machine- Hours 220 20 240 Direct Labor- Hours 28 75 103 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