"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 bld 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. Square Feet Total Labor- of Space Number of Machine- Direct Labor- Department Hours Occupied Employees Hours Hours Personnel 16,900 12,600 25 Custodial Services 8,500 3,400 44 Maintenance 14,300 10,800 63 Printing 30,800 40,988 107 161,080 15,000 Binding 107,000 20,800 304 47,000 77,000 177,500 88,500 543 208,000 92,000 Budgeted overhead costs in each department for the current year are shown below: Personnel Custodial Services Maintenance Printing Binding Total budgeted cost $ 330,000 65,100 93,800 417,000 162,000 $1,667,980 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 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: Direct Machine Hours Labor-Hours Printing Department 2,700 1,100 Binding Department 600 13,800 Total hours 3,300 14,900 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 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 Custodial Porsonnel Services Maintenance Printing Binding Departmental costs before allocations $ 330,000 $ 66,100 $ 93,800 $ 417,000 $ 162,000 Allocations: Personnel costs Printing Department Binding Department Total hours Machine Hours 2,700 600 3,300 Direct Labor-Hours 1,100 13,800 14,900 3. 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 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 Departmental costs before allocations $ 330,000 $ 65,100 $ 93,800 $ 417,000 $ 162,000 Allocations: Personnel costs Custodial services costs Maintenance costs Total costs after allocations 330,000 65,100 93,800 417,000 162,000 Predetermined overhead rate Reg 2 > Printing Department Binding Department Total hours Machine-Hours 2,700 600 3,300 Direct Labor-Hours 1,100 13,800 14,900 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 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.) Show less Personnel Custodial Maintenance Services Printing Binding Departmental costs before allocations $ 330,000 $ 65,100 $ 93,800 $ 417,000 $ 162,000 Allocations: Personnel costs Custodial services costs Maintenance costs Total costs after allocations 330,000 65,100 93,800 417,000 162,000 Predetermined overhead rate Printing Department Binding Department Total hours Machine-Hours 2,700 600 3,300 Direct Labor-Hours 1,100 13,800 14,900 a. Determine the amount of overhead cost that would be assigned to the job if the company used the overhead rates developed in 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 Req 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 Total Overhead Cost Stop-down method Direct method