"This is really an odd situation," said Jim Carter, general manager of Highland Publishing Company. "We get most of the jobs we bid on that require a lot of press time in the Printing Department, yet profits on those jobs are never as high as they ought to be. On the other hand, we lose most of the jobs we bid on that require a lot of time in the Binding Department. I would be inclined to think that the problem is with our overhead rates, but we're already computing separate overhead rates for each department. So what else could be wrong?" Highland Publishing Company is a large organization that offers a variety of printing and binding work. The Printing and Binding departments are supported by three service departments. The costs of these service departments are allocated to other departments in the order listed below. The Personnel cost is allocated based on number of employees. The Custodial Services cost is allocated based on square feet of space occupied and the Maintenance cost is allocated based on machine-hours Machine-Direct Labor- Total Labor- Square Feet of Number of Space Occupied Employees Department Personnel Custodial Services Maintenance Printing Binding Hours 16,600 8,500 14,300 30,600 101,000 171,000 Hours Hours 12,200 3,500 10,900 40,200 20.700 87,500 25 40 67 102 305 539 166,000 49.000 15,000 76,000 91,000 215,000 Budgeted overhead costs in each department for the current year are shown below: Personnel Custodial Services Maintenance Printing Binding Total budgeted cost $340,000 65,300 93,700 411,000 165,000