"This is really an odd situation," said Jim Carter, yenrai manager Quruguhil - Whigg cechzany. We get most of the jobs we bid on Fices yotit of profits on the Binding arce never astigh as they ought to be. On the other problem is with our overhead rates, but we're already comput of in her Bingiggepartment. I would be inclined to think that the 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 scrvice 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 occupled and the Maintenance cost is allocated based on machine-hours. Budgeted overhead costs in each department for the current year are shown below: Required: 1. Using the step-down method, allocate the service deparment cosis to thc consuming departments. Then compute predetermined overhead rates in the two operating departments. Use machine-hours as the cllocation 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 metiod. 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 iabor 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 (t) 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. Using the step-down method, allocate the service department costs to the consuming departments. Then compute predetermined overhead rates in the two operating departments. Hse machine-hours as the aliocation base in the Printing Department and direct laborhours as the allocation base in the Binding Department. (Please enter aliocations from a department as negative and aliocations 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 armount.) Repeat requirement 1 above, this time using the direct method. Again compute prodetermined overhead rates in the Printing and Binding departments. (Please enter allocations frofra department as neqative and allocations to a department as positive. The line should add across to zero. Do not round intermedrate calculations. Round "Predetermined overhead rate" to 2 decimal places and rest of the answers to the nearest whole dollar amount.) Show lessa 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 caiculations to 2 decimal places and final answers to the nearest whole dollar amount.)
