D E F G B Pristine Products (PP) has three service departments and two operating departments. The service departments and their allocation bases are: Factory Administration (labour hours), Custodial Services (square metres) and Personnel (employees). One operating department, Machining, applies overhead on the basis of machine hours. The other operating department, Assembly, applies overhead on the basis of direct labour-hours. Budgeted operating data for the upcoming year follows: Operating Departments Budgeted overhead before allocation Labour hours Square metres Employees Machine hours Direct labour hours Service Departments Factory Custodial Administration Services $750,000 $275,400 24,000 14,200 2,300 28 12 Personnel $88,300 36,000 10,000 22 Machining $922,440 60,000 70,000 44 135,000 101,000 Assembly $777,040 180,000 20,000 154 45,000 234,000 Required: 1. Prepare a schedule to allocate service department costs to operating departments using the step method. Calculate the predetermined overhead rate for each operating department. (8 marks). You may not to use all the highlighted cells. Use this table to calculate the allocation percentages Service Departments Operating Departments Factory Custodial Administration Services Personnel Machining Assembly Total PP SM 1 New D Operating Departments Personnel Machining Assembly Total A B 16 Use this table to calculate the allocation percentages 17 Service Departments Factory Custodial 18 Administration Services 19 20 21 22 23 24 25 Operating Departments Personnel $38,300 Machining $922,440 Assembly $777,040 Total $2,763,180 26 Use this table to allocate the costs and calculate the predetermined overhead rates 27 Service Departments 28 Factory Custodial Administration Services 29 Budgeted overhead before allocation $750,000 $275,400 30 31 32 33 Budgeted overhead after allocation 34 35 36 Predetermined overhead rates 37 37 2. Assume that the company bids on a job that requires 8,500 machine hours in Machining and 18,400 direct labour-hours in Assembly. How much 38 overhead would have to be applied if the step-down method had been used? (3 marks) 39 40 Machining Assembly Total 41 42 43 44 45 46 47