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Baxter Manufacturing produces machine parts on a job-order basis. Most business is obtained through bidding. Most firms competing with Baxter bid full cost plus a 20% mark-up. Recently, with the hope of gaining more sales, Baxter reduced its markup from 25% to 20% of cost. The company operates two service departments and two producing departments. The budgeted costs and the normal activity levels for each department are given below:

Calculate the total costs in Producing Department D based on the direct method.

Calculate the bid for Job K if the direct method of allocation is used.

Calculate the total costs in Producing Department D based on the step method.

Calculate the bid for Job K if the step method of allocation is used.

Baxter Manufacturing produces machine parts on a job-order basis. Most business is obtained through bidding. Most firms competing with Baxter bid full cost plus a 20% mark-up. Recently, with the hope of gaining more sales, Baxter reduced its markup from 25% to 20% of cost. The company operates two service departments and two producing departments. The budgeted costs and the normal activity levels for each department are given below: Service Dept. Service Dept. . $100,000 B Producing Dept. C $100,000 Producing Dept. D $50,000 $200,000 30 30 Direct overhead costs Number of employees Maintenance hours Machine hours Labour hours 2,000 200 6,400 1,600 10,000 1,000 1,000 10,000 The direct costs of department A are allocated on the basis of employees; those of department B are allocated on the basis of maintenance hours. Departmental overhead rates are used to assign costs to products. Department C uses machine hours, and Department D uses labour hours. The firm is preparing to bid on a job (Job K) that requires three machine hours per unit produced in department C and no time in department D. The expected prime costs per unit are $67

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