Beauville Furniture Corporation produces sofa recliners, and lounge chairs. Beauville is located in a medium-sood community in the southeastern part of the United States. It is a major employer in the community. In fact, the economic wall- being of the community is tied very strongly to Beale Beauville soerates a sami, a fabric plant, and a furniture plant in the same community. The sawmill but logs from independent producers. The sawmill then processes the logs its four grades of lumberists and seconds. I common, No. 2 common, and No. 3 common all costs incurred in the mit are common to the four grades of lumber all four grades of lumber are used by the furniture plant. The mill transfers everything it produces to the future plant, and the grades are transferred at cost. Trucks are used to move the lumber from the mill to the furniture plant, although ne outside sales exist, the mill could sell to external customers, and the seling prices of the four grades are kno The fabric plant is responsible for producing the fabric that is used by the furniture plant. To produce three titally different fabrics fed by fabric 10 cous F60, F870, and F800; aspectively), the plant has three separate production operations-ee for ad fabric. Thus, production of all three fabrics occurs at the same time in different locations in the plant. Each fabec's production operation has two processes the weaving and pattern process and the coloring and biting process. In the weaving and pattern process, yam is used to create yards of fabric with different designs. In the next process, the fabric is red, cut into 25-yard sections, and wrapped around cardboard sods to form 25-yard bolts. The buttare transported by form to the future plant's Receiving Department. All of the output of the fabric plant is used by the fumitur plant (to produce the sofas and chairs). For accounting purposes, the fabric is transferred at cost to the futur plant The furniture plant produces anders for customers on a special-order basis. The customers sedly the ovarets, style, fabric Number grade, and pattern. Typical jobs are large involving at least 300 units). The plant has two production decentments: Cutting and Assembly. In the Cutting Department, the fabric and wooden frame components are sized and cut. Other components are purchased from external suppliers and are removed from stores as nesided for assembly after the fabric and wooden components are finished for the entire job they are moved to the Assembly Department. The Assembly Department takes the individual components and assembles the sofas (or chairs). Beauville Furniture has been in business for over two decades and has a good reputation were during the past five years, experienced ring and deding sales Bids were increasingly tout (even aggressive) on the more popular models. Yet, the company was winning bids on some of the mare difficut-produce am Lance mays, the one and manage was frustrated. He simply couldn't understand how some if N compettors could sat for such low prices. On a common sofa job involving 300 units, Beauville's bits were running $25 per unit, or $12.500 per job more than the winning bids (on average). Yet, on the more difficult Itams, Bave's bids were running about $60 per unit is than the next cost bid ta berling, vice president of finance, was assigned the task of preparing a cost analysis of the company's product lines, Lance wanted to know the company's costs were excessive. Puraps the company was being wasteful, and it was simply casting more to produce fumiturs than it was costing its comput Gisele prepared herself by reading recent literature on cost management and product costing and attending several conferences that explored the same is She then viewed the coing procedures of the company's mill and two plants and did a preminary assessment of their soundness. The production sets of the mill were common to all umber grades and were assigned using the physical units method. Since the output and production costs were fairly uniform thoughout the year the mill used an actual costing system. Although Gisels had no difficulty with actual corting she decided to explore the effects of using the sales-value-at-split-off method. Thus, cost and production dats for the mill were gathered so that an anabis could be conducted. The two plaets used normal costing systems. The fabric plant seed process costing, and the fumiture plant seed job-ender costing. Both plants ssed plantside overhead rates based an direct labor hours: Based on her initial reviews, she concluded that the coating procedures for the fabric plant were satisfactory Essential, there was no evidence of product diversity. A statistical analysis revealed that about 90 percent of the variability in the plant's events cost could be explained by direct labor hours. Thus, the use of a plantwide overhead rate based on direct labor hours seemed justified what did concem her though, was the material waste that she observed in the plant. Maybe a standard cost stem would be seful for increasing the overal cost efficiency of the plant. Consequently, part of her report to Lance, she decided to include a description of the fabric plant's costing procedures-at least for one of the fabric types. She also deodet to develop a standard cost sheet for the chosen fabric. The fumbure plant, however was a more difficut matter Product diversty was present and could be causing some distortions in product costs. Furthermore, statistical analys revealed that only about 40 percent of the variability in overhead cost was explained by the direct labor hours he decided that additional analysis was needed so that a sound product costing method could be recommended. One pomibility would be to increase the number of overheat rates. Thin, she decided to indude departmental data so that the effect of moving to departmental rates could be med finally, the als wanted to explore the possibility of converting the semill and fabric plant into profit centers and changing the existing trender pricing policy with the cooperation of the cal accounting manager for the land each plants controller, she gathered the falling day Sawmill: Grade Firsts and seconds No. 1 commen Joint manufacturing costs: $900,000 Quantity Produced (board feet) 1.500,000 3,000,000 Price at Split-Off (per 1,000 board foot) 3300 225 No. 2 common 1,875,000 140 No. 3 common 1,125,000 100 Total 7,500,000 Fabric Plant: Budgeted overhead: $1,200,000 (50% fixed) Practical volume (direct labor hours): 120,000 hours Actual overhead: $1,150,000 (50% fixed) Actual hours worked: Weaving and Coloring and Grade Pattern Bolting Total 20,000 12,000 32,000 Fr 28.000 14,000 42.000 Fabric F 26,000 18,000 44,000 74,000 44,000 118,000 Departmental data on Fabric FB70 (actual costs and actual outcomes): Weaving and Pattern Coloring and Bolting Beginning inventories Units 20,000 400 Costs Transferred in 10 $100,000 Materials $80,000 $1,000 $18,000 $1,600 Overhead $22,000 $9,000 Current production: Units started 80,000 Units transferred out 80,000 3,200 Costs Transferred in 10 Materials $320,000 $82,000 Laber $208,000 $95,400 Overhead Percentage completion Beginning inventory Ending inventory 30% 40% "Units are measured in yards for the Weaving and Pattern Department and in bolts for the Coloring and Bolting Department Note: With the exception of the cardboard bolt rods, materials are added at the beginning of each process. The cost of the relatively insignificant and is included in overhead Proposed standard cost sheet for Fabric FB70 (for the Coloring and Bolting Department only): Transferred-in materials (25 yards @ $10) Other materials (100 ounces @ $0.20) Labor (3.1 hours @ $8) Fixed overhead (3.1 hours @ $5) Variable overhead (3.1 hours @ $5) Standard cost per unit Furniture Plant: Departmental data (budgeted): $250.00 20.00 24.00 15,50 15.50 $325.00 Service Departments Producing Departments General Receiving Power Maintenance Factory Overhead $450,000 $500,000 $300,000 $525,000 Cutting Assembly $750,000 $375,000 Machine hours 60,000 15,000 Receiving orders 13,500 9,000 Square feet 1,000 5,000 4,000 15,000 10,000 Direct labor hours 50,000 200,000 After some discussion with the furniture plant controller, Gisela decided to use machine hours to calculate the overhead rate for the Cutting Department and direct labor hours for the Assembly Department rate (the Cutting Department was more automated than the Assembly Department). As part of her report, she wanted to compare the effects of plantwide rates and departmental rates on the cost of jobs. She wanted to know if overhead costing could be the source of the pricing problems the company was experiencing. To assess the effect of the different overhead assignment procedures, Gisela decided to examine two prospective jobs. One job, Job A500, could produce 500 sofas, using a frequently requested style and Fabric FB70. Bids on this type of job were being lost more frequently to competitors. The second job, Job B75, would produce 75 specially designed recliners. This job involved a new design and was more difficult for the workers to build. It involved some special cutting requirements and an unfamiliar assembly. Recently, the company seemed to be winning more bids on jobs of this type. To compute the costs of the two jobs, Gisela assembled the following information on the two jobs: Job A500: JOD A500! Direct materia Fabric F70 Lumber (No. 1 common) Other components Direct labor Cutting Department Assembly Department Machine time Cutting Department Assembly Department 180 $350 20,000 board 30.12 $36,600 400 hours $10 1,600 hours $8.75 350 machine hours 50 machine tours Job B75: Direct mater Fabric F70 26 yards $350 Lumber first and seconds) 2,200 board feet 10.12 Other components $3,236 Direct laber Cutting Department 70 hours $10 Assembly Department 240 hours $5.75 Machine time Cutting Department 90 machine hours Assembly Department 15 machine hours Required: 1. Complete the following table by calculating the sawmill's cost per board for each grade using both the physical units method and the sales-value-at-split-off method. Begin by allocating the joint manufacturing costs to each grade, and calculate the cost per board foot for each grade using each method. Round unit cost answers to two decimal places. a. Physical units method of allocation: Grades Allocation Firsts and seconds No. 1 commen No. 2 commen Total Unit Cost Sales-value-at-split-off method: Grades Firsts and seconds No. 1 comm No. 2 commen No. 3 common Allocation Unit Cost