*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 Number of Department Direct Labor. Hours Space Occupied Personnel Esployees Machine Hours Hours 16,800 Custodial Services 12,000 26 8,780 3,700 50 Maintenance 14,700 le, 65 Printing 30,200 40,30 208 163,000 Binding 10,000 18.000 20,80 jas 42,00 22:00 279,400 87700 554 205B NO Budgeted overhead costs in each department for the current year are shown below Personnel Custodial Services intenance Printing Dinding total budgeted cost $ , 65.00 93, 41%. 357, $18,00 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. The compute predetermined overhead rates in the two operating departments Use machine hours of the allocation base in the Printing Department and direct in the hace in the Rin Anant Maintenance Printing Binding Total budgeted cost 91,800 417,00 167690 51.483.600 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 roles 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 Total hours Machine Hours 2,600 500 IN Direct Labor ours 1,400 1200 1460 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: 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. (Plantes allocation from a department as negative and allocations to department as positive. The line should add across to send Do not found intermediate calculations. Round "redeterminad head cate to decimal places and rest of the answers to the nearest whole dallar amount) Printing Department Binding Department Total hours Machines 2,600 1580 3,180 Direct Labor- 1,400 1,200 14 6 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. Req1 Reg 2 Req 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 rabe" to 2 decimal places and rest of the answers to the nearest whole dollar amount.) Show less Custodial Personnel Maintenance Services $ 340.0005 85.8005 03.800 Printing Binding 417.000 $ 107.000 Departmental costs before allocations Allocations Personnel Custodial services costs Maintenance costs Total poster locations Predetermined overhead rate 340.000 85.000 03.800 417.000 107.000