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

1: Data Table

Support departments:
Building and grounds	$12,000
Personnel	1,200
General plant administration	28,830
Cafeteria: Operating loss	1,430
Storeroom	8,910	$52,370
Operating departments:
Machining	$36,000
Assembly	48,000	84,000
Total for support and operating departments		$136,370

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:

2: Data Table

	Direct		Square Feet of
	Manufacturing	Number of	Floor Space	Manufacturing	Number of
Department	Labor-Hours	Employees	Occupied	Labor-Hours	Requisitions
Building and grounds	0	0	0	0	0
Personnel*	0	0	4,000	0	0
General plant administration	0	35	10,500	0	0
Cafeteria: operating loss	0	10	4,000	1,000	0
Storeroom	0	5	7,500	3,000	0
Machining	4,000	50	35,000	7,000	6,000
Assembly	12,000	100	19,000	8,200	4,000
Total	16,000	200	80,000	19,200	10,000
*Basis used is number of employees

Two Jobs Information

	Direct Manufacturing LaborHours
	Machining	Assembly
Job 88	19	2
Job 89	7	18

(Options for 1-5: -Manufacturing labor-hours / Number of employees / Number of requisitions / Square feet of floor space occupied)

(Option for 6: -prefer the direct method / be indifferent as to which method to choose / prefer the step-down method)

(Option for 7: -the two methods result in the same / this method results in the greater / this method results in the lesser)

Print 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 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 Allocation Base Support Department Building and grounds Personnel General plant administration Cafeteria: operating loss Storeroom (5) Using the step-down method, allocate support-department costs. Allocate the costs of the support departments in the order given in this problem. (Round all indirect allocation rates to the nearest cent and all other computations to the nearest whole dollar. Use parentheses or a minus sign when decreasing departments by allocating costs.) Operating Departments Support Departments General Cafeteria Bldg and Plant Operating Grounds Personnel Admin Loss Storeroom Machining Assembly Costs incurred Allocation of costs: Building and grounds Personnel General plant administration Cafeteria Storeroom Total budgeted costs of operating departments Develop overhead rates per direct manufacturing labor-hour for machining and assembly using the step-down method. Round the overhead rates to three decimal places.) Print Overhead rate per direct manufacturing labor-hour Direct manufacturing labor-hours = Step-down method: Total costs allocated to department Machining Assembly Requirement 2. Using the direct method, rework requirement 1. Using the direct method, allocate support-department costs. (Round cost allocations to the nearest whole dollar. Use parentheses or a minus sign when decreasing departments by allocating costs.) Operating Departments Support Departments General Cafeteria Plant Operating Personnel Admin Loss Bldg and Grounds Storeroom Machining Assembly Costs incurred Allocation of costs: Building and grounds Personnel General plant administration Cafeteria Storeroom Total budgeted costs of operating departments Develop overhead rates per direct manufacturing labor-hour for machining and assembly using the direct method (Round the overhead rates to three decimal places.) Direct method: Overhead rate per direct manufacturing labor-hour Total costs allocated to department Direct manufacturing labor-hours = Machining Assembly Requirement 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. Start by computing the total overhead costs for each job using the rates developed in (a) requirement 1 (the step-down method.) (Round the total overhead costs to the nearest cent.) Print (a) Step-down method: Total Overhead Costs Job 88: Machining Assembly Total cost of Job 88 Job 89: Machining Assembly Total cost of Job 89 Now compute the total overhead costs for each job using the rates developed in (b) requirement 2 (the direct method). (Round the total overhead costs to the nearest cent.) (b) Direct method: Total Overhead Costs Job 88: Machining Assembly Total cost of Job 88 Job 89: Machining Assembly Total cost of Job 89 Requirement 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 manager of machining department would (6) - since (7) - amount of overhead costs being allocated to the machining department. Print 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 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 Allocation Base Support Department Building and grounds Personnel General plant administration Cafeteria: operating loss Storeroom (5) Using the step-down method, allocate support-department costs. Allocate the costs of the support departments in the order given in this problem. (Round all indirect allocation rates to the nearest cent and all other computations to the nearest whole dollar. Use parentheses or a minus sign when decreasing departments by allocating costs.) Operating Departments Support Departments General Cafeteria Bldg and Plant Operating Grounds Personnel Admin Loss Storeroom Machining Assembly Costs incurred Allocation of costs: Building and grounds Personnel General plant administration Cafeteria Storeroom Total budgeted costs of operating departments Develop overhead rates per direct manufacturing labor-hour for machining and assembly using the step-down method. Round the overhead rates to three decimal places.) Print Overhead rate per direct manufacturing labor-hour Direct manufacturing labor-hours = Step-down method: Total costs allocated to department Machining Assembly Requirement 2. Using the direct method, rework requirement 1. Using the direct method, allocate support-department costs. (Round cost allocations to the nearest whole dollar. Use parentheses or a minus sign when decreasing departments by allocating costs.) Operating Departments Support Departments General Cafeteria Plant Operating Personnel Admin Loss Bldg and Grounds Storeroom Machining Assembly Costs incurred Allocation of costs: Building and grounds Personnel General plant administration Cafeteria Storeroom Total budgeted costs of operating departments Develop overhead rates per direct manufacturing labor-hour for machining and assembly using the direct method (Round the overhead rates to three decimal places.) Direct method: Overhead rate per direct manufacturing labor-hour Total costs allocated to department Direct manufacturing labor-hours = Machining Assembly Requirement 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. Start by computing the total overhead costs for each job using the rates developed in (a) requirement 1 (the step-down method.) (Round the total overhead costs to the nearest cent.) Print (a) Step-down method: Total Overhead Costs Job 88: Machining Assembly Total cost of Job 88 Job 89: Machining Assembly Total cost of Job 89 Now compute the total overhead costs for each job using the rates developed in (b) requirement 2 (the direct method). (Round the total overhead costs to the nearest cent.) (b) Direct method: Total Overhead Costs Job 88: Machining Assembly Total cost of Job 88 Job 89: Machining Assembly Total cost of Job 89 Requirement 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 manager of machining department would (6) - since (7) - amount of overhead costs being allocated to the machining department