Integration Exercise $14$ Service Department Cost Allocation; Step$-$Down Method versus Direct Method; Plantwide and Departmental Overhead Rates $[$LO$21,$ LO$22,$ LO$410,$ LO$411]$

Sendai Company has budgeted costs in its various departments as follows for the coming year:

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Factory Administration$ $270,000$Custodial Services$68,760$Personnel$28,840$Maintenance$45,200$Machining$$overhead$376,300$Assembly$$overhead$175,900$Total cost$ $965,000$

The company allocates service department costs to other departments in the order listed below.

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DepartmentNumber of EmployeesTotal Labor$-$HoursSquare Feet of Space OccupiedDirect Labor$-$HoursMachine$-$HoursFactory Administration$12-5,000--$Custodial Services$43,0002,000--$Personnel$55,0003,000--$Maintenance$2522,00010,000--$Machining$4030,00070,00020,00070,000$Assembly$6090,00020,00080,00010,000146150,000110,000100,00080,000$

Machining and Assembly are operating departments; the other departments are service departments. Factory Administration is allocated based on total 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.

$2.$ Allocate service department costs to consuming departments by direct method. Again compute predetermined overhead rates in Machining and Assembly.

$3.$ Assume that the company doesn$$t bother with allocating service department costs but simply computes a 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.

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$4.$ Suppose a job requires machine$-$hours and labor$-$hours as follows:

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$$Machine$-$HoursDirect Labor$-$HoursMachining Department$19025$Assembly Department$1075$Total hours$200100$

Using the overhead rates from requirements $(1),(2),$ and $(3),$ compute the amount of overhead cost that would be assigned to the job.