Question
BethanyBethany Corporation has three divisions: pulp, paper, and fibers.Bethany's newcontroller, Tim Weber, is reviewing the allocation of fixed corporate-overhead costs to the three divisions. He
BethanyBethany Corporation has three divisions: pulp, paper, and fibers.Bethany's newcontroller, Tim Weber,
is reviewing the allocation of fixed corporate-overhead costs to the three divisions. He is presented with the following information for each division for 2017:
pulp | paper | fibers | |
Revenue | 8500000 | 16700000 | 24600000 |
Direct Manufacturing cost | 3100000 | 8400000 | 10300000 |
Division Administration cost | 2800000 | 1000000 | 4200000 |
Division Margin | 2600000 | 7300000 | 10100000 |
Number of employee | 375 | 300 | 825 |
Floor Space (square feet) | 35200 | 20900 | 53900 |
Until now,Bethany Corporation has allocated fixed corporate-overhead costs to the divisions on the basis of division margins.Weber asks for a list of costs that comprise fixed corporate overhead and suggests the following new allocationbases:
Fixed Corporate-overhead costs | Suggested Allocation bases |
Human resource management | $2300000 number of employee |
facility | $3300000 floor space (square feet) |
corporate Admin | $4300000 Division Admin costs |
total | $9900000 |
Requirement 1. Allocate 2017 fixed corporate-overhead costs to the three divisions using division margin 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)?
Allocate the fixed corporate-overhead costs, then calculate the division operating margins in dollars and as a percentage of revenue. (Round allocation proportions to one decimal place, X.X%, and dollar amounts to the nearest dollar. Enter operating margin percentages to one decimal, X.X%.)
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