Chapter 5 Assignment Print Item 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 Log Yard Milling Drying Packaging Administration 8,100 Hours worked 11,000 9,720 21,060 16,200 25,920 Number of employees 8 5 6 12 16 8 Department costs $212,960 $261,690 $375,045 $767,400 $524,095 $271,040 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 Chapter 5 Assignment Print Item Maintenance Hours Worked Usage Percent Department Administration % Log Yard Milling Drying Packaging Totals % Administration Department # of Employees Usage Percent Maintenance % Log Yard Milling Drying Packaging Totals % Using the cells below, create the formulas that will simultaneously allocate support department costs among the departments. "M" represents Maintenance and "A" represents Administration. Check My Work Previous Chapter 5 Assignment Print Item 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 = + % ) A = $ + % MV) 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 = A = = $ Chapter 5 Assignment E Print Item Use the following table to allocate the support cost departments. Round allocated amounts to the nearest whole dollar. If an amount is zero, enter "0". Support Departments Production Departments Maintenance Administration Log Yard Milling Drying Packaging Hours worked Number of employees Department cost $ Maintenance Administration Final department costs Chapter 5 Assignment Print Item Using the rounded amounts from the support cost allocation table (previous task), complete the following table to allocate the production department costs to each product line. Round allocated amounts to the nearest whole dollar. Cost Allocation Thousand Board Feet Weight Factor Weighted Thous. Bd. Ft. Weighted % of Board Feet Final Department Costs to Product Line Log Yard: Hardwood % X $ Softwood Total Log Yard % $ Milling: Hardwood % X Softwood X Total Milling % 0% Drying: Hardwood % X $ Softwood X Total Drying % Packaging: Hardwood % X Softwood X Check My Work Previous Next Chapter 5 Assignment Print Item ucruywy Hardwood % X Softwood Total Packaging % Feedback Check My Work The weighted average method allocates joint costs based on weight factors for each product. The weight factors are multiplied by physical units to arrive at weighted physical units. These weighted physical units are then used to allocate the joint costs to the products. Forest Land earns revenue of $100,000 from selling its by-products, wood shavings and saw dust. Allocate the revenue to each product line in the following table and determine the final cost per product line. Thousand Board Feet Percentage of Board Feet By-product Revenue Portion of By- product Revenue Hardwood % $100,000 Softwood 100,000 Total % Cost per Product Line Hardwood Softwood Check My Work Previous Next Chapter 5 Assignment E Print Item Forest Land earns revenue of $100,000 from selling its by-products, wood shavings and saw dust. Allocate the revenue to each product line in the following table and determine the final cost per product line. Percentage of Thousand Board Feet By-product Revenue Portion of By- product Revenue Board Feet Hardwood $100,000 Softwood 100,000 Total % Cost per Product Line Hardwood Softwood Log Yard $ Milling Drying Packaging Subtotal Portion of By-product revenue Total cost per product line $ Feedback Check My Work Previous Next