*This is really an odd situation." said Jim Cartet, general manager of Highland Publishing Company "We get most of the jobs vie 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 Tatal Labor square feet of Number of Direct Labor Department Hours Space Occupied Employees Machine Hours Hours Personnel 16,00 12,700 25 Custodial Services 8,300 3.100 43 Maintenance 14,300 10.000 67 printing 30,200 40. 100 166,000 16,000 Binding 102.000 20.100 12000 NE Budgeted overhead costs in each department for the current year are shown below. Personnel Custodial Services Maintenance Printing Binding Total budgeted cost $ 320,000 65,90 93,900 411,00 $1,US 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: Direct Labor-hours Printing Department Binding Department 14, 680 Machine-Hours 2,600 60 1, lee 13. See Total hours 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. 1.053, 880 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 2,600 600 3, 200 Direct Labor-Hours 1,200 13,500 14.600 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 cappute predetermined overhead rates in the two operating departments. Use machine-hours as the allocation base in the Printing Dpartment and direct labor hours as the allocation base in the Binding Department. (Please enter allocations from a department as negare 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 Maintenance Services S 320,000 $ 65,000 $ 03.000 Printing Binding 5 413.000 5 101.000 (320,000) Departmental costs before allocations Allocations: Personnel costs Custodial services costs Maintenance costs Total costs after allocations Predetermined overhead rate 0 85.000 23,900 413.000 161.000 Reg 2 > Binding Total budgeted cost 161, eee 51 953,800 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 2,68 60e 3,200 Direct Labor-Hours 1.18 13 500 14.68 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 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 Maintenance Printing Binding Services 5 320.000 S 85,000 5 83.000 5 413.000 $ 101.000 Departmental costs before allocations Allocations: Personnel costs Custodial services costs Maintenance costs Total costs after allocations Predetermined overhead rate 320.000 65.000 93.000 413.000 101 000 Budgeted overhead costs in each department for the current year are shown below. Personnel Custodial Services Maintenance Printing Binding Total budgeted cost $320, eee 65.90 93,900 151 $1,053520 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 2,6ee see Direct Labor-Hours 1,100 13.50 14,500 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 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 finalansers to the nearest whole dollar amount.) Total Overhead Cost Step-down method Direct method Reg2