The Central Valley Company has prepared department overhead budgets for budgeted-volume levels before allocations as follows:

Support departments:
Building and grounds	$45,000
Personnel	$300
General plant administration	$37,320
Cafeteria operating loss	$970
Storeroom	$9,990
Total for support departments		$93,580
Operating departments:
Machining	$36,000
Assembly	$46,000
Total for operating departments		$82,600
Total for support and operating departments		$176,180

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:

Department	Direct Manufacturing Labor-Hours	Number of Employees	Square Feet of Floor Space Occupied	Indirect Manufacturing Labor-Hours	Number of Requisitions
Building and grounds	0	0	0	0	0
Personnel (Basis used is number of employees)	0	0	2,500	0	0
General plant administration	0	40	12,000	0	0
Cafeteria operating loss	0	10	5,000	3,000	0
Storeroom	0	5	6,000	2,000	0
Machining	8,000	55	22,000	13,000	6,000
Assembly	32,000	140	202,500	26,000	4,000
Total	40,000	250	250,000	44,000	10,000

Required:

(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	Assembly
Job 88	17	7
Job 89	9	20

(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.

What is required: a new solution, for all questions, a review of the outputs, an explanation of all the steps with details for understanding.

The Central Valley Company has prepared department overhead budgets for budgeted-volume levels before allocations as follows: Management has decided that the most appropriate inventory costs are achieved by using individual depariment 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: Required: (1) Using the step-down method, allocate suppont-department costs. Develop overhead rates per direct manufacturing labot-bour 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 I and (b) requirement 2 . (4) The company evaluates the performanee 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