"This is really an odd sltuation," 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 varlety 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 Iisted 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: 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: 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 ln(2) above. Complete this question by entering your answers in the tabs below