Bethany Corporation has three divisions. pulp, paper, and fibers. Betharry's new controller. Stefan Mayer, is reviewing the allocation of fixed corporate ove head casts to the three divisions. He is presented with the following information for each division for 2017: (Click the icon to view the data.) Until now, Bethany Corporation has alocaled fixed corporate-overhead costs to the divisions on the basis of division margirs. Mayer asks for a list of costs that comprise food corporate averhead and suggests the following new allocation bases: Click the icon to view the food corporate averhead and now alocation bases.) Read the requirements Requirement 1. Allocate 2017 fixed corporate-overhead costs to the three divisions using division margin as the allocation base. What is each civision's operating margin percentage (division margin minus alocated fixed corporate-overhead costs 8e a percentage of revenueel? Allocate the fixed corporale-we-teadusls, the calculate the division operating margins in dollars and as a percentage of reverie. (Round allocation proportions to one decir al place, XX%, and dollar amounts to the nearest uolar. Enler Operating inargin percentages to one decinal, Paper Fibers Pulp 2.300.000 Division margin 3 3 7.200.000 $ 10,500,000 Allocated fixed corporate-overhead Operating margin Operating margin % 0 Requirements i Data Table Pulp $ 2 1. Allocate 2017 fixed corporale-overhead costs to the three divisions using divisioni imargin as the allocation base. What is each division's operating margin percentage (division margin minus allocated fixed corporate-overhead costs as a percentage of revenues)? Allocata 2017 fted costs using the allocation bases suggested by Mayer. What is cach divis on's operating margin percentage under the new allocation scheme? 3. Compare and discuss the results of requirements 1 and 2 If division performance incentives are based on operating margin percentage, which division would be most receplive to the new alocation scheme? Which division would be the least receplive? Why? 4. Which allocation scheme should Bethany Corporation use? Why? How might Mayer overcome any objections that may arise from the divisions? Revenues Direct manufacturing costs Division administrative costs Fibers 25,500,000 10,800,000 4,200.000 8,500,000 $ 3.400,000 2900,000 2,300,000 3 Paper 18.100,COO S 7.900.000 1.000.000 7 200,000 $ S 10.500.000 Division margin Number of employees Floor space (square feet) $ 6015 221 S 30.400 S $ $ S 18,000 5 81,600 Print Done Print Done Bethany Corporation has three divisions. pulp, paper, and fibers. Betharry's new controller. Stefan Mayer, is reviewing the allocation of fixed corporate ove head casts to the three divisions. He is presented with the following information for each division for 2017: (Click the icon to view the data.) Until now, Bethany Corporation has alocaled fixed corporate-overhead costs to the divisions on the basis of division margirs. Mayer asks for a list of costs that comprise food corporate averhead and suggests the following new allocation bases: Click the icon to view the food corporate averhead and now alocation bases.) Read the requirements Requirement 1. Allocate 2017 fixed corporate-overhead costs to the three divisions using division margin as the allocation base. What is each civision's operating margin percentage (division margin minus alocated fixed corporate-overhead costs 8e a percentage of revenueel? Allocate the fixed corporale-we-teadusls, the calculate the division operating margins in dollars and as a percentage of reverie. (Round allocation proportions to one decir al place, XX%, and dollar amounts to the nearest uolar. Enler Operating inargin percentages to one decinal, Paper Fibers Pulp 2.300.000 Division margin 3 3 7.200.000 $ 10,500,000 Allocated fixed corporate-overhead Operating margin Operating margin % 0 Requirements i Data Table Pulp $ 2 1. Allocate 2017 fixed corporale-overhead costs to the three divisions using divisioni imargin as the allocation base. What is each division's operating margin percentage (division margin minus allocated fixed corporate-overhead costs as a percentage of revenues)? Allocata 2017 fted costs using the allocation bases suggested by Mayer. What is cach divis on's operating margin percentage under the new allocation scheme? 3. Compare and discuss the results of requirements 1 and 2 If division performance incentives are based on operating margin percentage, which division would be most receplive to the new alocation scheme? Which division would be the least receplive? Why? 4. Which allocation scheme should Bethany Corporation use? Why? How might Mayer overcome any objections that may arise from the divisions? Revenues Direct manufacturing costs Division administrative costs Fibers 25,500,000 10,800,000 4,200.000 8,500,000 $ 3.400,000 2900,000 2,300,000 3 Paper 18.100,COO S 7.900.000 1.000.000 7 200,000 $ S 10.500.000 Division margin Number of employees Floor space (square feet) $ 6015 221 S 30.400 S $ $ S 18,000 5 81,600 Print Done Print Done