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The Heightened Hill Company has prepared department overhead budgets for budgeted$-$volume levels before allocations as follows:

Bi: $($Click the icon to view the department overhead budgets.$)$

Management has decided that the most appropriate inventory costs are achieved by using individual department overhead rates. These rates are developed after support$-$department costs are allocated to operating departments. Bases for allocation are to be selected from the following:

::: $($Click the icon to view the data.$)$

Read the requirements.

Requirement $1.$ Using the step$-$down method, allocate support$-$department costs. Develop overhead rates per direct manufacturing labor$-$hour for machining and assembly. Allocate the costs of the support departments in the order given in this problem. Use the allocation base for each support department you think is most appropriate.

Begin by selecting the allocation base for each support department.

Support Department

Building and grounds

Personnel

General plant administration

Cafeteria: operating loss

Storeroom

Allocation Base

Requirements

M Question Viewer

turing labor$-$hours

Number of employees

Number of requisitions

Square feet of floor space occupied

$1.$ Using the step$-$down method, allocate support$-$department costs. Develop overhead rates per direct manufacturing labor$-$hour for machining and assembly. Allocate the costs of the support departments in the order given in this problem. Use the allocation base for each support department you think is most appropriate.

$2.$ Using the direct method, rework requirement $1.$

$3.$ Based on the following information about two jobs, determine the total overhead costs for each job by using rates developed in $($a$)$ requirement $1$ and $($b$)$ requirement $2.$

Direct Manufacturing Labor$-$Hours

Machining

Assembly

Job $88$

$25$

$6$

Job $89$

$2$

$20$

$4.$ The company evaluates the performance of the operating department managers on the basis of how well they managed their total costs, including allocated costs. As the manager of the Machining Department, which ments $1$ and $2?$ Explain.

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