"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 Number of Department Personnel Hours Space Occupied Employees Machine- Hours Direct Labor- Hours 16,600 12,700 20 Custodial Services 8,800 3,600 45 Maintenance 14,000 10,700 63 Printing 30,400 40,400 103 162,000 14,000 Binding 107,000 20,900 302 45,000 80,000 176,800 88,300 533 207,000 94,000 Budgeted overhead costs in each department for the current year are shown below: Personnel Custodial Services Maintenance Printing Binding Total budgeted cost $ 350,000 65,400 93,200 415,000 166,000 $ 1,089,600