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I am having trouble trying to solve the formula to allocate the department costs. I am also having trouble solving the weight factor, weighted thousand
I am having trouble trying to solve the formula to allocate the department costs. I am also having trouble solving the weight factor, weighted thousand per feet, and weighted percentage of board feet.
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 Ine 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 fine 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 Indudes 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 Administration Log Yard Milling Drying Packaging Hours worked 11,825 8,910 10,692 23,166 28,512 17,820 Number of employees 6 4 4 10 12 8 Department costs $175,000 $216,275 $309,940 $747,000 $433,160 $224,000 Your next step is to determine the proportional usage of each support department's cost driver by the other departments to which it costs are to be allocated. Complete the following tables. Maintenance Department Hours Worked Usage Percent Previous Check My Work All work saved Save and Exit Submit Assignment for Grading Maintenance Hours Worked Department Administration Usage Percent 8,910 10 Log Yard 10,692 12 Milling 23,166 26 Drying 28,512 32 Packaging 17,820 20 Totals 89,100 100 Administration of Employees Usage Percent Department Maintenance 15 4 Log Yard 41 10 10 25 Milling Drying 12 30 8 20 Packaging 40 100 Totais Using the cells below, create the formulas that will simultaneously allocate support department costs among the departments. "M" represents Maintenance and represents Administration 176,000+ 15 %AEV MES AW 216,275 + 10 %M Step by Step Solution
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