The Tail Top Company has prepared department overhead budgets for budgeted-volume levels before allocations as follows: (Click the icon to view the department overhead budgets.) Management has decided that the most appropriate inventory costs are achieved by using individual department overhead rates. These rates are developed after support-department costs are allocated to operating departments. Bases for allocation are to be selected from the following: (Click the icon to view the data.) Read the requirements. Requirement 1. Using the step-down method, allocate support-department costs. Develop overhead rates per direct manufacturing labor-hour for machining and assembly. Allocate the costs of the support departments in the order given in this problem. Use the allocation base for each support department you think is most appropriate. Begin by selecting the allocation base for each support department. Allocation Base Support Department Building and grounds Personnel General plant administration Cafeteria: operating loss Storeroom Requirements 1. Using the step-down method, allocate support-department costs. Develop overhead rates per direct manufacturing labor-hour for machining and assembly. Allocate the costs of the support departments in the order given in this problem. Use the allocation base for each support department you think is most appropriate. 2. Using the direct method, rework requirement 1. 3. Based on the following information about two jobs, determine the total overhead costs for each job by using rates developed in (a) requirement 1 and (b) requirement 2. Direct Manufacturing Labor-Hours Assembly 8 18 Machining 25 Job 88 Job 89 6 4. The company evaluates the performance of the operating department managers on the basis of how well they managed their total costs, including allocated costs. As the manager of the Machining Department, which allocation method would you prefer from the results obtained in requirements 1 and 2? Explain. Data table Department Building and grounds Personnela General plant administration Cafeteria: operating loss Storeroom Machining Assembly Direct Manufacturing Number of Labor-Hours Employees Total aBasis used is number of employees 0 0 0 0 0 7,000 21,000 28,000 0 0 36 9 9 45 81 180 Square Feet of Floor Space Occupied 0 1,800 10,800 3,600 4,500 18,000 11,300 50,000 Indirect Manufacturing Labor-Hours 0 0 0 2,000 2,000 6,000 27,800 37,800 Number of Requisitions I 0 0 0 0 0 7,000 3,000 10,000 X Data table Support departments: Building and grounds Personnel General plant administration Cafeteria: Operating loss Storeroom Operating departments: Machining Assembly Total for support and operating departments $ 4,000 1,296 40,428 140 11,188 31,000 47,000 $ 57,052 78,000 $ 135,052