"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 Machine Direct Labor Department Hours Space Occupied Esployees Hours Hours Personnel 16,80 12,000 24 Custodial Services 8,200 3,200 Maintenance 14,50 10,760 Printing 30,100 40,100 153,000 15,000 Binding 109,be 20.900 42,000 72,00 178 600 86.900 210.000 87.000 69 SESER 549 4 Budgeted overhead costs in each department for the current year are shown below. Personnel Custodial Services Maintenance Printing Binding Total budgeted cost $ 310,000 65,300 93,700 115,00 155.0 51 09 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, alocate the service department costs to the consuming departments. The compute predetermined overhead rates in the two operating departments. Use machine-hours as the location bars in the printin 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 Drinting Department 2,800 1,100 Binding Department 600 134 Total hours G414,500 a. Determine the amount of overhead cost that would be assigned to the job if the company used the overhead rates developed in (0) 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 Rei Reg2 Reg Using the step-down method. allocate the service department costs to the consuming departments. The compute predetermined overhead rates in the two operating departments. Us 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 department as negative and allocations to a department positive. The line should add across to 20. Do not round Intermediate calculation. Found Predetermined overhead rate' to 2 decimales and rest of the ancers to the nearest whole doll amount.) Show Custodia Personnel 3310,000 Maintenance 051003 Printing landing 415.000 3 105.000 99.700 Departmental costs before locations Alocation Personnel costs usted nosos erhead rates Complete this question by entering your answers in the tabs below. Req1 Reg 2 Rea 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 Custodia Services Maintenance $ 310,000 $ 05.300 $ 93,700 Printing Binding $ 415,000 5 165.000 Departmental costs before allocations Allocations: Personnel costs Custodial services costs Maintenance costs Total costs after allocations Predetermined overhead rate 310.000 65,300 93.700 415,000 105,000 RIA Reg 2 > Complete this question by entering your answers in the tabs below. rates Req 1 Reg 2 Req 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 Services Maintenance Printing Binding $ 310.000 $ 05.300 5 93,700 5 415,000 5 165.000 Departmental costs before allocations Allocations Personnel costs Custodial services costs Maintenance costs Total costs after a locations Predetermined overhead rate 310.000 05.300 93,700 415,000 105.000 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 Req2 Reg 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.) how less Total Overhead Cost Step-down method Direct method