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The Sendai Co., Ltd., of Japan has budgeted costs in its various departments as follows for the coming year: Factory Administration $ 1,063,750 Custodial Services 125,540 Personnel 39,520 Maintenance 155,140 Machiningoverhead 969,100 Assemblyoverhead 875,450 Total cost $ 3,228,500 The company allocates service department costs to other departments in the order listed below. Department Number of Employees Total Labor- Hours Square Feet of Space Occupied Direct Labor- Hours Machine- Hours Factory Administration 27 11,700 Custodial Services 11 13,400 2,900 Personnel 14 17,400 12,600 Maintenance 58 44,700 16,800 Machining 100 150,000 52,500 46,000 232,000 Assembly 150 200,000 17,500 229,000 29,000 360 425,500 114,000 275,000 261,000 Machining and Assembly are operating departments; the other departments are service departments. Factory Administration is allocated based on labor-hours; Custodial Services based on square feet occupied; Personnel based on number of employees; and Maintenance based on machine-hours. Required: 1. Allocate service department costs to consuming departments by the step-down method. Then compute predetermined overhead rates in the operating departments using machine-hours as the allocation base in Machining and direct labor-hours as the allocation base in Assembly. 2. Repeat (1) above, this time using the direct method. Again compute predetermined overhead rates in Machining and Assembly. 3. Assume that the company doesnt bother with allocating service department costs but simply computes a single plantwide overhead rate that divides the total overhead costs (both service department and operating department costs) by the total direct labor-hours. Compute the plantwide overhead rate. 4. Suppose a job requires machine and labor time as follows: Machine- Hours Direct Labor-Hours Machining Department 270 29 Assembly Department 19 80 Total hours 289 109 Using the overhead rates computed in (1), (2), and (3) above, compute the amount of overhead cost that would be assigned to the job if the overhead rates were developed using the step-down method, the direct method, and the plantwide method.

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