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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 la hours as the allocation base in the Binding Department. (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 less Custodial Services Personnel Maintenance Printing Binding Departmental costs before allocations $ 350,000 S 65,300 $ 93,700 $ 419,000 $ 165,000| Allocations: Personnel costs (350,000) Custodial services costs Maintenance costs Total costs after allocations Predetermined overhead rate 65,300 93,700 419,000 165,000

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 la hours as the allocation base in the Binding Department. (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 less Custodial Services Personnel Maintenance Printing Binding Departmental costs before allocations $ 350,000 S 65,300 $ 93,700 $ 419,000 $ 165,000| Allocations: Personnel costs (350,000) Custodial services costs Maintenance costs Total costs after allocations Predetermined overhead rate 65,300 93,700 419,000 165,000

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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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 2,600 1,400 13,600 600 Total hours 3, 200 15,000 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. Req 1 Req 2 Req 3A 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. (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 (350,000) Custodial services costs Maintenance costs Total costs after allocations Predetermined overhead rate 65,300 93,700 419,000 165,000 Req 1 Req 2 >
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 2,600 1,400 13,600 600 Total hours 3, 200 15,000 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. Req 1 Req 2 Req 3A 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. (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 (350,000) Custodial services costs Maintenance costs Total costs after allocations Predetermined overhead rate 65,300 93,700 419,000 165,000 Req 1 Req 2 >
"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
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
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