Problem 4B-6 Step-Down Method versus Direct Method; Predetermined Overhead Rates (LO4-10, LO4. 11] The Sendai Co., Ltd., of Japan has budgeted costs in its various departments as follows for the coming year: Factory Administration Custodial Services Personnel Maintenance Machining-overhead Assembly-overhead Total cost $ 270,000 68,760 28,840 45,200 376,300 175,900 $ 965,000 The company allocates service department costs to other departments in the order listed below. Department Factory Administration Custodial Services Personnel Maintenance Machining Assembly Square Total Feet of Direct Number of Labor Space Labor- Machine- Employees Hours Occupied Hours Hours 12 5,000 4 3,000 2,000 5 5,000 3,000 25 22,000 10,000 40 30,000 70,000 20,000 70,000 60 90,000 20,000 80,000 10,000 146 150,000 110,000 100,000 80,000 Machining and Assembly are operating departments; the other departments are service departments. Factory Administration is allocated based on 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. Repeat (1) above, this time using the 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 single 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. 4. Suppose a job requires machine and labor time as follows: Machine- Hours 190 10 Direct Labor- Hours 25 75 Machining Department Assembly Department Total hours 200 100 Using the overhead rates computed in (1), (2), and (3) above, compute the amount of overhead cost that would be assigned to the job if the overhead rates were developed using the step-down method, the direct method, and the plantwide method. Required 1 Required 2 Required 3 Required 4 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. (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 rates" to 2 decimal places and other answers to the nearest whole dollar amount.) Show less Personnel Maintenance Machining Assembly Factory Custodial Administration Services $ 270,000 $ 68.760 $ 28,840 45,200 Departmental costs before allocation Allocations: Factory administration Custodial services Personnel Maintenance Total costs after allocation $ 270,000 $ 68,760 $ 28,840 $ 45,200 $ 0 $ 0 Predetermined overhead rate Required 1 Required 2 Required 3 Required 4 Repeat requirement 1, this time using the direct method. Again compute predetermined overhead rates in Machining and Assembly. (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 rates" to 2 decimal places and other answers to the nearest whole dollar amount.) Maintenance Machining Assembly Factory Custodial Personnel Administration Services $ 270,000 $ 68,760 $ 28,840 $ 45,200 Departmental costs before allocation Allocations: Factory administration Custodial services Personnel Maintenance Total costs after allocation $ 270,000 $ 68.760 $ 28,840 $ 45,200 $ 0 $ 0 Predetermined overhead rate Complete this question by entering your answers in the tabs below Required 1 Required 2 Required 3 Required 4 Assume that the company doesn't bother with allocating service department costs but simply computes a single 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. (Round your answer to 2 decimal places.) Plantwide overhead rate per DLH Required 1 Required 2 Required 3 Required 4 Using the overhead rates computed in (1), (2), and (3) above, Compute the amount of overhead cost that would be assigned to the job if the overhead rates were developed using the step-down method, the direct method, and the plantwide method. (Do not round intermediate calculations. Round "Predetermined overhead rates" to 2 decimal places and other final answers to the nearest whole dollar amount.) Show less Overhead Cost Step-down method Direct method Plantwide method