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, Jolsts, planks, rafters, beams, stringers, posts, decking, subflooring and concreto forms. Forestland also sells a dy-product, wood shavings and saw dust. Shavings are purchased for form 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 fect 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, deying, and packaging, The Hardwood line produces 300 thousand board foot of product while the Softwood produces so thousand board foot. 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 waighted 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 foet. 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 or the support department cost drivers. You have created the following tables Maintenance Administration Log Yard Milling Drying Packaging Hours worked 11,000 8,100 9,720 21,060 16,200 25,920 Number of employees 4 Department costs $193,600 5237,000 $340,950 $521,400 $426,450 $246,400 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, 4 10 12 Maintenance Department Hours Worked Usage Percent Administration 8,100 10 % Log Yard 9,720 12 Milling 21,060 26 Drying 16,200 20 Packaging 25,920 V 32 Totals 81,000 100 % Administration Department # of Employees Usage Percent Maintenance 15 % Log Yard 4 10 Milling 8 20 Drying 10 25 Packaging 12 307 Totals 40 100 % Using the cells below, create the formulas that will simultaneously allocate support department costs among the departments. "M" represents Maintenance and "A" represents Administration Using the cells below, create the formulas that will simultaneously allocate support department costs among the departments. "M" represents Maintenance and "A" represents Administration. MS 193,600 + 15 % A) A- 237,900 + 10 % 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. MS AS Feedback Check My Work There are two support departments and four production departments. The total cost of each support department is allocated to the other support department and the four production departments on the base of a cost driver. What is the cost driver for the Maintenance Department? For the Administrative Department? For each support department, find the units of its cost driver related to the other support department and each of the four production departments. Add these to find the total units of the cost driver consumed by the five departments. Then calculate the percentage of the total consumed by each department Review the Reciprocal Services Method in your text. Remember the total cost to be allocated from a support department is the sum of its original departmental costs and its share of the costs allocated from the other support department. How would this be expressed in an equation? 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 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 Milling Drying Maintenance Administration Log Yard Packaging Hours worked Number of employees Department cost Maintenance Administration Final department costs Feedback Check My Work Multiply the total cost to be allocated from support department by the percentage of that cost consumed by the other support department and each of the production departments to find the amount allocated to each department. What should be the total cost remaining in a support department when the allocation process is finished? 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 Weight Weighted Weightede of Final Department Board Feet Factor Costs to Product Line Log Yard: Thousand Cost Allocation Thous. Bd. Fl. Board Feet Thousand Board Feet Weight Factor Weighted Thous. Bd. Ft. Weighted % of Board Feet Final Department Costs Cost Allocation to Product Line Log Yard: Hardwood Softwood Total Log Yard % Milling: Hardwood % x Softwood Total Milling % Drying: Hardwood % X Softwood Total Drying Packaging 11 Hardwood Softwood Total Packaging % 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 By-product Portion of By- Board Feet Board Feet Revenue product Revenue Hardwood $100,000 Thousand % 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