"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. Number of Employees Machine- Direct Labor- Hours Hours Department Personnel Custodial Services Maintenance Printing Dinding Total Labor- Square Feet of Hours Space Occupied 16,100 12,900 8,200 4,000 14,500 10,600 30,500 40,500 109,000 20, 200 178,300 88,200 108 302 534 162,000 44,000 206,000 11,000 75.000 86.000 Budgeted overhead costs in each department for the current year are shown below: Personnel Custodial Services Maintenance Printing Binding Total budgeted cost 320,000 65,900 93,300 413,000 168,000 1,060,200 $ 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 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: Printing Department Binding Department Total hours Machine-Hours 2,400 800 3,200 Direct Labor-Hours 1.100 13,800 14,900 o. 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 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 Personnel $ 320,000 Custodial Services S 65,900 Maintenance $ 93,300 Printing $ 413,000 Binding $ 168,000 Departmental costs before allocations Allocation: Personnel Custodial services Maintenance Total costs after allocations Predetermined overhead rate 320,000 65,900 93,300 413,000 168,000 Reg 2 > 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. Req1 Req 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 $ 320,000 Custodial Services $ 65,900 Maintenance $ 3,300 Printing $ 413,000 Binding $ 168,000 Departmental costs before allocations Allocation: Personnel Custodial services Maintenance Total costs after allocations Predetermined overhead rate 320,000 65,900 93,300 413.000 168,000 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. Req 1 Reg 2 Req 3A 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 above. (Do not round Intermediate calculations. Round "Predetermined overhead rates" to 2 decimal places and other final answers to the nearest whole dollar amount.) Show less Total Overhead Cost Step-down method Direct method ( Req2