"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 Direct Labor- Labor- Space Number of Machine- Hours Occupied Employees Hours Hours. 29 40 65 108 309 Square Feet of Department Personnel 16,400 12,600 Custodial Services 8,100 3,300 Maintenance 14,300 10,700 Printing 30,900 40,500 Binding 103,000 20,400 172,700 87,500 160,000 19,000. 50,000 75,000 551 210,000 94,000 Budgeted overhead costs in each department for the current year are shown below: $ 310,000 66,000 93,900 Personnel Custodial Services. Maintenance Printing Binding Total budgeted cost 414,000 166,000 1,049,900 Because of its simplicity, the company has always used the direct method to allocate service department costs to the two operating departments. 5 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: Printing Department Binding Department 800 Total hours 3,600 Machine- Hours Req 1 Reg 2 2,800 Direct Labor- Hours. 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 3A 1,100 13,100 14,200 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.) 1 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. mok ences Reg 3A Using the step-down method, allocate the service department costs to the consuming departments. Then compute predetermined i 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 Req 1 Req 2 Departmental costs before allocations Allocations Personnel costs Custodial services costs Maintenance costs Total costs after allocations Predetermined overhead rate Personnel Custodial Services Binding $ 310,000 $ 60,000 $ 93,900 $ 414,000 $ 166,000 (310,000) 0 414,000 166,000 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 pbq 2 Req 3A Rea 2 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.) Departmental costs before allocations Allocations: Personnel costs Custodial services costs Maintenance costs Total costs after allocations Predetermined overhead rate Custodial Services Maintenance Printing Binding $ 310,000 $ 66,000 $ 93,900 $ 414,000 $ 166,000 Personnel 310,000 414,000 166,000 Show less A 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 2 Req 3A 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.) Req 1 Step-down method Direct method Total Overhead Cost Show less A - ces "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 Space Number of Machine- Hours Occupied Employees Hours 29 40 65 108 160,000 19,000 309 50,000 75,000 551 210,000 94,000 Budgeted overhead costs in each department for the current year are shown below: $ 310,000 66,000 93,900 414,000 166,000 $ 1,049,900 Department Personnel 16,400 12,600 Custodial Services 8,100 3,300 Maintenance 14,300 10,700 Printing 30,900 40,500 Binding 103,000 20,400 172,700 87,500 Personnel Custodial Services. Maintenance Printing Binding Total budgeted cost Direct Labor- Hours 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 Printing Department Binding Department 800 Total hours 3,600 2,800 Direct Labor- Hours 1,100 13,100 14,200 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. Complete this question by entering your answers in the tabs below. Req 1 Req 2 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.) Req 3A Departmental costs before allocations Allocations: Personnel costs Custodial services costs Maintenance costs Total costs after allocations Predetermined overhead rate Custodial Services Maintenance : Printing $ 310,000 $ 66,000 $ 93,900 $ 414,000 $ Personnel (310,000) 0 Req 1 66,000 93,900 Req 2 > 414,000 Binding 166,000 166,000 Show less A 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 keq 2 Red 34 Reg 2 Repeat requirements ouve, 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.) Departmental costs before allocations Allocations Personnel costs Custodial services costs Maintenance costs Total costs after allocations Predetermined overhead rate Personnal Custodial Services Maintenance Printing 310,000 $ 66,000 $ 93.900 $ 414,000 $ S 310,000 414,000 Binding 166,000 166.000 Show less 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 2 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 Req 1 Step-down method Direct method Req 3A Total Overhead Cost