Requirements 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 Machining Job 88 20 Job 89 6 Assembly 8 18 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. The Central Valley 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. (Round all indirect allocation rates to the nearest cent and all other computations to the nearest whole dollar. Round the overhead rates to three decimal places.) Step-down method: Machining Overhead rate per direct manufacturing labor-hour Assembly Data Table Support departments: Building and grounds Personnel General plant administration Cafeteria: Operating loss Storeroom Operating departments: Machining Assembly Total for support and operating departments $ 4,000 1,230 71,250 480 6,644 $ 83,604 $ 33,000 45,000 78,000 $ 161,604 Data Table Direct Manufacturing Department Labor-Hours Number of Employees Square Feet of Floor Space Occupied Indirect Manufacturing Labor-Hours Requisitions Number of Building and grounds 0 0 0 0 0 Personnel General plant administration 1,500 0 0 0 30 6,000 0 0 Cafeteria: operating loss 12 6,000 1,000 0 Storeroom 0 6 7,200 3,000 0 Machining 8,000 45 18,000 11,000 7,000 Assembly 32,000 57 11,300 45,000 3,000 40,000 150 50,000 60,000 10,000 Total "Basis used is number of employees