"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.

Budgeted overhead costs in each department for the current year are shown below:

Because of its simplicity, the company has always used the direct method to allocate service department costs to the two operating

departments.

Required:

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.

Repeat $(1)$ above, this time using the direct method. Again compute predetermined overhead rates in the Printing and Binding

departments.

Assume that during the current year the company bids on a job that requires machine and labor time as follows:

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.$\backslash$table$[[$Req $1],[\backslash$table$[[$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 $$