"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 occupled and the Maintenance cost is allocated based on machine-hours. Total Labor Square Feet of Number of Hachine- Direct Labor Department Hours Space Occupied Employees Hours Personnel 16,300 13,000 Custodial Services 8,400 4,000 Maintenance 14,200 10,500 Printing 30,600 40,500 162,000 18,000 Binding 100,000 20,700 308 48,000 25,000 169 500 38,700 210.000 93,000 27 48 61 106 550 Budgeted overhead costs in each department for the current year are shown below: Personnel Custodial Services Maintenance Printing Binding Total budgeted cost $ 330,000 65,380 93,500 410,00 166,000 $1,062,800 Because of its simplicity, the company has always used the direct method to allocate service department costs to the two operating 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: Printing Departrent Binding Department Total hours Machine Houes 2,900 400 Direct Cabo Hours 1.21 1300 14 500 Determine the amount of overhead cost that would be assigned to the job if the company used the averhead 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 tates developed in (2) above. Complete this question by entering your answers in the tabs below. Reg 1 Reg 2 Reg 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 Personnel Custodial Services Maintenance Printing Binding developed in (2) above Complete this question by entering your answers in the tabs below. Reg 1 Reg 2 Reg 3 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 Custodial Personnel Maintenance Printing Services Binding Departmental costs before allocations $ 330 000 $ 65,300 $ 93,500 $ 410,000 $ 164,000 Allocations Perannot costs Custodia Survice costs Maintenance costs Total costs whocations Prodetermined overhoed te Rog Req2 > developed in (2) above. Complete this question by entering your answers in the tabs below. Reg 1 Reg 2 Reg JA 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.) Show less Personnel Custodial Services Maintenance Printing Binding Departmental costs before allocations $ 330,000 $ 65,300 $ 93.500 5 410.000 $ 164,000 (Allocations Personal costs Custodial services costs Maintenance costs Total costs after allocations Predetermined overhead rate 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. Reg 1 Reg 2 Reg JA 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 comparvy 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 Total Overhead Cost Step down method Direct method (Reg 2 Re>