#4

West State Furniture (WSF) manufactures desks and desk choirs using two deportments within a single facility. The West Department produces the desks, and the State Department produces the chairs. WSF uses plontwide allocation to allocate its overheod to all products. Direct moterials cost is the allocation bose. The rate used is 60 percent of direct materials cost. Last yeor, revenue, direct materials, and direct labor were as follows. Required: a. Compute the profit or loss for eoch product using plontwide ollocation. b. The new CFO ot WSF was surprised thot the company used a plontwide rate, becouse the two products were produced in separate deportments. The cost anolyst estimated the overheod rotes for eoch deportment seporately. Using deportment rates, the West. Department rate would be 33 percent of direct materials cost. The State Department rate would be 102 percent of direct materials cost. Recompute the profits or loss for each product using eoch deportment's allocotion rate (bosed on direct materials cost in each department)