"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. Total Labor- Square Feet of Department Personnel Hours Space Occupied Number of Machine- Employees. Hours Direct Labor- Hours 16,100 12,900 30 Custodial Services 8,600 3,200 46 Maintenance 14,200 10,900 63 Printing Binding 30,100 40,900 101 167,000 18,000 101,000 20,200 302 47,000 78,000 170,000 88,100 542 214,000 96,000 Budgeted overhead costs in each department for the current year are shown below: Personnel Custodial Services Maintenance Printing Binding Total budgeted cost $ 320,000 65,100 93,500 414,000 170,000 $1,062,600