"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 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 variety 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 listed below. The Personnel cost is allocated based on number of employees. The Custodial Services cost is allocated based on square feet of space occupied and the Maintenance cost is allocated based on machine-hours. Number of Employees Square Feet of Space Occupied 12,800 3,800 10,400 40,300 20,000 87,300 Total Labor- Machine- Direct Labor- Hours Department Personnel Hours Hours 16,700 22 Custodial Services Maintenance Printing Binding 8, 300 47 14,500 69 20,000 75,000 95,000 30,400 100 102,000 171,900 169,000 46, 000 215,000 310 548 Budgeted overhead costs in each department for the current year are shown below: Personnel Custodial Services Maintenance Printing Binding Total budgeted cost $ 350,000 65,300 93,700 419,000 165,000 $1,093,000 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:
"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 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 variety 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 listed below. The Personnel cost is allocated based on number of employees. The Custodial Services cost is allocated based on square feet of space occupied and the Maintenance cost is allocated based on machine-hours. Number of Employees Square Feet of Space Occupied 12,800 3,800 10,400 40,300 20,000 87,300 Total Labor- Machine- Direct Labor- Hours Department Personnel Hours Hours 16,700 22 Custodial Services Maintenance Printing Binding 8, 300 47 14,500 69 20,000 75,000 95,000 30,400 100 102,000 171,900 169,000 46, 000 215,000 310 548 Budgeted overhead costs in each department for the current year are shown below: Personnel Custodial Services Maintenance Printing Binding Total budgeted cost $ 350,000 65,300 93,700 419,000 165,000 $1,093,000 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:
Managerial Accounting: The Cornerstone of Business Decision-Making
7th Edition
ISBN:9781337115773
Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Publisher:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Chapter10: Standard Costing And Variance Analysis
Section: Chapter Questions
Problem 51E: Jackie Iverson was furious. She was about ready to fire Tom Rich, her purchasing agent. Just a month...
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Question
Please I need the required number 2 only because of the policies I will ask separately
!["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 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 variety 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 listed below. The Personnel cost is allocated based on number of employees. The Custodial Services cost is allocated
based on square feet of space occupied and the Maintenance cost is allocated based on machine-hours.
Total Labor-
Square Feet of
Space Occupied
12,800
3,800
10,400
40,300
20,000
Number of
Machine-
Direct Labor-
Employees
Department
Personnel
Custodial Services
Hours
Hours
Hours
16,700
8, 300
14,500
30,400
102,000
171,900
22
47
Maintenance
69
Printing
100
20,000
169,000
46, 000
215,000
Binding
310
75.000
87,300
548
95,000
Budgeted overhead costs in each department for the current year are shown below:
Personnel
$ 350,000
Custodial Services
Maintenance
Printing
Binding
65,300
93,700
419,000
165,000
Total budgeted cost
$1,093,000
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:
Direct
Machine-Hours
Labor-Hours](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F8f61e626-7d33-482f-bf18-423884fdaa73%2F83db98a5-1074-4a14-9771-44ccd6c8500f%2Fjb1z0uc_processed.png&w=3840&q=75)
Transcribed Image Text:"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 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 variety 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 listed below. The Personnel cost is allocated based on number of employees. The Custodial Services cost is allocated
based on square feet of space occupied and the Maintenance cost is allocated based on machine-hours.
Total Labor-
Square Feet of
Space Occupied
12,800
3,800
10,400
40,300
20,000
Number of
Machine-
Direct Labor-
Employees
Department
Personnel
Custodial Services
Hours
Hours
Hours
16,700
8, 300
14,500
30,400
102,000
171,900
22
47
Maintenance
69
Printing
100
20,000
169,000
46, 000
215,000
Binding
310
75.000
87,300
548
95,000
Budgeted overhead costs in each department for the current year are shown below:
Personnel
$ 350,000
Custodial Services
Maintenance
Printing
Binding
65,300
93,700
419,000
165,000
Total budgeted cost
$1,093,000
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:
Direct
Machine-Hours
Labor-Hours
![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:
Direct
Machine-Hours
Labor-Hours
Printing Department
Binding Department
1,400
13,600
15,000
2,600
600
Total hours
3, 200
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 in (2) above.
Complete this question by entering your answers in the tabs below.
Reg 1
Reg 2
Reg 3A
Repeat requirement 1 above, this time using the direct method. Again compute predetermined overhead rates in the Printing and
Binding departments. (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.)
Show lessA
Custodial
Services
Personnel
Maintenance
Printing
Binding
Departmental costs before allocations
$
350,000 $
65,300 $
93,700
$
419,000 $
165,000
Allocations:
Personnel costs
Custodial services costs
Maintenance costs
Total costs after allocations
350,000
65,300
93,700
419,000
165.000
Predetermined overhead rate
< Req 1
Req 3A >](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F8f61e626-7d33-482f-bf18-423884fdaa73%2F83db98a5-1074-4a14-9771-44ccd6c8500f%2F6hdyddg_processed.png&w=3840&q=75)
Transcribed Image Text: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:
Direct
Machine-Hours
Labor-Hours
Printing Department
Binding Department
1,400
13,600
15,000
2,600
600
Total hours
3, 200
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 in (2) above.
Complete this question by entering your answers in the tabs below.
Reg 1
Reg 2
Reg 3A
Repeat requirement 1 above, this time using the direct method. Again compute predetermined overhead rates in the Printing and
Binding departments. (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.)
Show lessA
Custodial
Services
Personnel
Maintenance
Printing
Binding
Departmental costs before allocations
$
350,000 $
65,300 $
93,700
$
419,000 $
165,000
Allocations:
Personnel costs
Custodial services costs
Maintenance costs
Total costs after allocations
350,000
65,300
93,700
419,000
165.000
Predetermined overhead rate
< Req 1
Req 3A >
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