"This is really an odd situation," 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 Deportment, yet profits on those jobs are never os high os 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 Deportment. 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 offering a variety of printing and binding work. The Printing and Binding

deportments 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 bosed on number of employees. The Custodial Services cost is allocated

bosed on square feet of space occupied and the Maintenance cost is allocated based on machine$-$hours.

Budgeted overhead costs in each department for the current year ore shown below:

Becouse of its simplicity, the company hos always used the direct method to allocate service department costs to the two operating

deportments.

Required:

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 bose in the Printing Department and direct

lobor$-$hours os the allocation bose in the Binding Deportment.

Repeat $(1)$ obove, this time using the direct method. Agsin compute predetermined overhesd rates in the Printing and Binding

departments.

Assume during the current year the compony bids on a job requiring machine and labor time as follows:

a$.$ Calculate the overhead cost assigned to the job if the company used the overhesd rates developed in $(1)$ above. Then calculate

the overhead cost 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.

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.

Note: 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.

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