The Eastern Summit Company has prepared department overhead budgets for budgeted-volume levels before allocations as follows: E: (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 Begin by selecting the allocation base for each support department. Support Department Data Table Requirements Allocation Base Building and grounds Personnel Direct 1. Using the step-down method, allocate support-department costs. Develop Square Feet of Indirect Manufacturing overhead rates per direct manufacturing labor-hour for machining and Number of Floor Space Manufacturing General plant administration Number of assembly. Allocate the costs of the support departments in the order given in Department Labor-Hours Employees Occupied Labor-Hours Requisitions Cafeteria: operating loss this problem. Use the allocation base for each support department you think is Building and grounds 0 0 0 0 0 most appropriate Storeroom Personnel 0 0 2,500 0 2. Using the direct method, rework requirement 1. 0 3. Based on the following information about two jobs, determine the total General plant administration 0 40 12,000 0 0 Data Table overhead costs for each job by using rates developed in (a) requirement 1 and 0 Cafeteria: operating loss 10 4,500 3,000 0 (b) requirement 2. Storeroom 0 5 6,000 2,000 0 Direct Manufacturing Labor-Hours Machining 10,000 55 22,000 13,000 10,000 Support departments: Machining Assembly 30.000 140 203,000 26,000 8.300 Assembly Building and grounds $ 45,000 Job 88 18 8 40,000 250 250,000 44,000 18,300 Personnel 7,800 Total Job 89 10 20 General plant administration 36,120 4. The company evaluates the performance of the operating department Basis used is number of employees Cafeteria: Operating loss 20,670 managers on the basis of how well they managed their total costs, including allocated costs. As the manager of the Machining Department, which Storeroom allocation method would you prefer from the results obtained i requirements 1 and 2? Explain Operating departments: Print Done Machining $ 36,000 Assembly 60,000 96,000 Print $ 223,890 Done Total for support and operating departments Clear All Check Answer 18,300 $ 127,890