"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. Department Personnel Custodial Services Maintenance Printing Binding ces Total Labor- Square Feet of Hours 16,300 8,200 Space Occupied Number of Employees Machine- Hours Direct Labor- Hours 12,400 25 3,300 41 14,000 10,400 61 30,100 40,400 104 161,000 15,000 109,000 20,000 310 41,000 77,000 177,600 86,500 541 202,000 92,000 Budgeted overhead costs in each department for the current year are shown below. Personnel Custodial Services Maintenance Printing Binding Total budgeted cost $ 310,000 65,800 93,800 414,000 162,000 $ 1,045,600 Because of its simplicity, the company has always used the direct method to allocate service department costs to the two operating departments. Required: 1. Using the step-down method, allocate the service department costs to the consuming departments. Then compute predetermined overhead rates in the two operating departments. Use machine-hours as the allocation base in the Printing Department and direct labor-hours as the allocation base in the Binding Department. 2. Repeat (1) above, this time using the direct method. Again compute predetermined overhead rates in the Printing and Binding departments. 3. Assume that during the current year the company bids on a job that requires machine and labor time as follows: Machine-Hours Direct Labor- Printing Department Binding Department Total hours 2,300 500 2,800 Hours 1,300 13,800 15,100 a. Determine the amount of overhead cost that would be assigned to the job if the company used the overhead rates developed in (1) above. Then determine the amount of overhead cost that would be assigned to the job if the company used the overhead rates developed in (2) above. Complete this question by entering your answers in the tabs below. Req 1 Req 2 Req 3A Using the step-down method, allocate the service department costs to the consuming departments. Then compute predetermined overhead rates in the two operating departments. Use machine-hours as the allocation base in the Printing Department and direct labor- hours as the allocation base in the Binding Department. (Please enter allocations from a department as negative and allocations to a department as positive. The line should add across to zero. Do not round intermediate calculations. Round "Predetermined overhead rate" to 2 decimal places and rest of the answers to the nearest whole dollar amount.) Show less A Personnel Custodial Services Maintenance Printing) Binding Departmental costs before allocations Allocations: $ 310,000 $ 65,800 $ 93,800 $ 414,000 $ 162,000 Complete this question by entering your answers in the tabs below. Req 1 Req 2 Req 3A Using the step-down method, allocate the service department costs to the consuming departments. Then compute predetermined overhead rates in the two operating departments. Use machine-hours as the allocation base in the Printing Department and direct labor- hours as the allocation base in the Binding Department. (Please enter allocations from a department as negative and allocations to a department as positive. The line should add across to zero. Do not round intermediate calculations. Round "Predetermined overhead rate" to 2 decimal places and rest of the answers to the nearest whole dollar amount.) Departmental costs before allocations Allocations: Personnel costs Custodial services costs Maintenance costs Total costs after allocations Predetermined overhead rate Personnel Custodial Services Maintenance Printing 93,800 $ 414,000 $ Binding 162,000 $ 310,000 $ 65,800 $ (310,000) 0 65,800 93,800 414,000 162,000 Reg.1 Req 2 > Show less A Complete this question by entering your answers in the tabs below. Req 1 Beq 2 Req 3A Repeat requirement 1 above, this time using the direct method. Again compute predetermined overhead rates in the Printing and Binding departments. (Please enter allocations from a department as negative and allocations to a department as positive. The line. should add across to zero. Do not round intermediate calculations. Round "Predetermined overhead rate" to 2 decimal places and rest of the answers to the nearest whole dollar amount.) Personnel Custodial Services Maintenance Departmental costs before allocations $ 310,000 $ 65,800 $ Printing 93,800 $ 414,000 $ Binding 162,000 Allocations: Personnel costs Custodial services costs Maintenance costs Total costs after allocations Predetermined overhead rate 310,000 65,800 93,800 414,000 162,000 Show less A eBook Complete this question by entering your answers in the tabs below. Print Req 1 Req 2 Req 3A References Determine the amount of overhead cost that would be assigned to the job if the company used the overhead rates developed in requirement 1 above. Then determine the amount of overhead cost that would be assigned to the job if the company used the overhead rates developed in requirement 2. (Round your intermediate calculations to 2 decimal places and final answers to the nearest whole dollar amount.) Show less A Step-down method Direct method Total Overhead Cost