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 were 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 (For each service department, use the allocation base that provides the best measure of service provided, as discussed in the chapter.)

Feet Total of Space Number of Machine- Labor-Hours Occupied Employees Hours Direct Labor- Hours Department Personnel Custodial Services Maintenance Printing Binding 26 16,100 2,800 3,500 10,600 0,200 40,100 04,000 20,500 8,100 14,400 60 101 166,000 12,000 305 49,000 79,000 215,000 91,000 172,800 87,500 537 Budgeted overhead costs in each department for the current year are shown below: Personnel Custodial Services Maintenance Printing Binding 330,000 65,300 93,500 411,000 164,000 Total budgeted cost $1,063,800 Because of its simplicity, the company has always used the direct method to allocate service department costs to the two operating departments