ForestLand Wood Products manufactures lumber and wood components. The company has two main product lines: Hardwood and Softwood. Hardwoods are used for flooring, cabinetry, paneling, doors and trimwork. Softwoods are used for wall studs, joists, planks, rafters, beams, stringers, posts, decking, subflooring and concrete forms. ForestLand also sells a by-product, wood shavings and saw dust. Shavings are purchased for farm and industrial use as well as for further processing into wood pellets and fiber board. The revenue is allocated to each product line based on the percentage of thousand board feet produced by the product line. Your accounting firm has been retained by ForestLand for three years. You have been assigned to properly allocate support department costs. Your manager wants the allocation to be as accurate as possible and has instructed you to use the reciprocal services method. She reminds you that revenue from by-products are used to offset costs. You begin your research and learn that there are four production departments: log yard, milling, drying, and packaging. The Hardwood line produces 300 thousand board feet of product while the Softwood produces 900 thousand board feet. The milling department direct costs, direct labor and overhead per thousand board feet for Hardwood is two times that of Softwood. You have been instructed to use the weighted average method to allocate the costs in the milling department between the two product lines. The remaining department costs are the same for both product lines, per thousand board feet. There are two support departments: maintenance and administration. The maintenance department is responsible for maintaining all equipment and janitorial duties. Because the equipment is used more extensively for hardwoods, the department cost driver is hours worked. The administration department includes the company president and his staff. Their duties include accounting, human resources, and information technology. The cost driver for the administration department is number of employees. In your first step, you determine the costs traced to each department and the usage of the support department cost drivers. You have created the following table: Maintenance Administration Log Yard Milling Drying Packaging Hours worked 11,825 8,910 10,692 23,166 28,512 17,820 Number of employees 6 4 4 10 12 8 Department costs $176,000 $216,275 $309,940 $747,000 $433,160 $224,000 Your next step is to determine the proportional usage of each support department's cost driver by the other departments to which its costs are to be allocated. Complete the following tables. Maintenance Department Usage Percent fill in the blank f41537f67fc2017_3 fill in the blank f41537f67fc2017_4 % Log Yard fill in the blank f41537f67fc2017_5 fill in the blank f41537f67fc2017_6 Milling fill in the blank f41537f67fc2017_7 fill in the blank f41537f67fc2017_8 Drying fill in the blank f41537f67fc2017_9 fill in the blank f41537f67fc2017_10 Packaging fill in the blank f41537f67fc2017_11 fill in the blank f41537f67fc2017_12 Totals fill in the blank f41537f67fc2017_13 fill in the blank f41537f67fc2017_14 % Administration Department Usage Percent fill in the blank f41537f67fc2017_17 fill in the blank f41537f67fc2017_18 % Log Yard fill in the blank f41537f67fc2017_19 fill in the blank f41537f67fc2017_20 Milling fill in the blank f41537f67fc2017_21 fill in the blank f41537f67fc2017_22 Drying fill in the blank f41537f67fc2017_23 fill in the blank f41537f67fc2017_24 Packaging fill in the blank f41537f67fc2017_25 fill in the blank f41537f67fc2017_26 Totals fill in the blank f41537f67fc2017_27 fill in the blank f41537f67fc2017_28 % Using the cells below, create the formulas that will simultaneously allocate support department costs among the departments. "M" represents Maintenance and "A" represents Administration. M = $fill in the blank f41537f67fc2017_29 + (fill in the blank f41537f67fc2017_30% ) A = $fill in the blank f41537f67fc2017_32 + (fill in the blank f41537f67fc2017_33% ) Solve the equations, If required round any decimal to three places in your computations. For example, .0183 would be rounded to .018. Round your final answer to the nearest dollar. M = $fill in the blank f41537f67fc2017_35 A = $fill in the blank f41537f67fc2017_36
ForestLand Wood Products manufactures lumber and wood components. The company has two main product lines: Hardwood and Softwood. Hardwoods are used for flooring, cabinetry, paneling, doors and trimwork. Softwoods are used for wall studs, joists, planks, rafters, beams, stringers, posts, decking, subflooring and concrete forms. ForestLand also sells a by-product, wood shavings and saw dust. Shavings are purchased for farm and industrial use as well as for further processing into wood pellets and fiber board. The revenue is allocated to each product line based on the percentage of thousand board feet produced by the product line.
Your accounting firm has been retained by ForestLand for three years. You have been assigned to properly allocate support department costs. Your manager wants the allocation to be as accurate as possible and has instructed you to use the reciprocal services method. She reminds you that revenue from by-products are used to offset costs.
You begin your research and learn that there are four production departments: log yard, milling, drying, and packaging. The Hardwood line produces 300 thousand board feet of product while the Softwood produces 900 thousand board feet. The milling department direct costs, direct labor and overhead per thousand board feet for Hardwood is two times that of Softwood. You have been instructed to use the weighted average method to allocate the costs in the milling department between the two product lines. The remaining department costs are the same for both product lines, per thousand board feet.
There are two support departments: maintenance and administration. The maintenance department is responsible for maintaining all equipment and janitorial duties. Because the equipment is used more extensively for hardwoods, the department cost driver is hours worked. The administration department includes the company president and his staff. Their duties include accounting, human resources, and information technology. The cost driver for the administration department is number of employees.
In your first step, you determine the costs traced to each department and the usage of the support department cost drivers. You have created the following table:
| Maintenance | Administration | Log Yard | Milling | Drying | Packaging | ||
| Hours worked | 11,825 | 8,910 | 10,692 | 23,166 | 28,512 | 17,820 | |
| Number of employees | 6 | 4 | 4 | 10 | 12 | 8 | |
| Department costs | $176,000 | $216,275 | $309,940 | $747,000 | $433,160 | $224,000 |
Your next step is to determine the proportional usage of each support department's cost driver by the other departments to which its costs are to be allocated. Complete the following tables.
| Maintenance | |||
| Department |
|
Usage Percent | |
|
|
fill in the blank f41537f67fc2017_3 | fill in the blank f41537f67fc2017_4 | % |
| Log Yard | fill in the blank f41537f67fc2017_5 | fill in the blank f41537f67fc2017_6 | |
| Milling | fill in the blank f41537f67fc2017_7 | fill in the blank f41537f67fc2017_8 | |
| Drying | fill in the blank f41537f67fc2017_9 | fill in the blank f41537f67fc2017_10 | |
| Packaging | fill in the blank f41537f67fc2017_11 | fill in the blank f41537f67fc2017_12 | |
| Totals | fill in the blank f41537f67fc2017_13 | fill in the blank f41537f67fc2017_14 | % |
| Administration | |||
| Department |
|
Usage Percent | |
|
|
fill in the blank f41537f67fc2017_17 | fill in the blank f41537f67fc2017_18 | % |
| Log Yard | fill in the blank f41537f67fc2017_19 | fill in the blank f41537f67fc2017_20 | |
| Milling | fill in the blank f41537f67fc2017_21 | fill in the blank f41537f67fc2017_22 | |
| Drying | fill in the blank f41537f67fc2017_23 | fill in the blank f41537f67fc2017_24 | |
| Packaging | fill in the blank f41537f67fc2017_25 | fill in the blank f41537f67fc2017_26 | |
| Totals | fill in the blank f41537f67fc2017_27 | fill in the blank f41537f67fc2017_28 | % |
Using the cells below, create the formulas that will simultaneously allocate support department costs among the departments. "M" represents Maintenance and "A" represents Administration.
M = $fill in the blank f41537f67fc2017_29 + (fill in the blank f41537f67fc2017_30%
)
A = $fill in the blank f41537f67fc2017_32 + (fill in the blank f41537f67fc2017_33%
)
Solve the equations, If required round any decimal to three places in your computations. For example, .0183 would be rounded to .018. Round your final answer to the nearest dollar.
M = $fill in the blank f41537f67fc2017_35
A = $fill in the blank f41537f67fc2017_36
Trending now
This is a popular solution!
Step by step
Solved in 2 steps with 6 images
