Question
In 2020, the loading/unloading department for DP Worlds Prince Rupert facilities handled on average 3,200 of the 45-foot containers per day. In 2020, the container
In 2020, the loading/unloading department for DP Worlds Prince Rupert facilities handled on average 3,200 of the 45-foot containers per day. In 2020, the container decontamination department for DP Worlds Prince Rupert facilities handled on average 400 of the 45-foot containers per day.
DP world is a company which creates revenues through two operating departments, the loading/unloading ,Of the $876 million invested by DP World into the Fairview container port, 90 percent ($788.4 million) was invested in the loading/unloading department assets and 5% ($43.8 million) was invested in the container decontamination department assets. The other 5% was invested in corporate office which has an expected zero return. The company expects the loading/unloading department to generate an ROI of 15% per year before tax over the planned 20-year life of the current equipment and expects the container decontamination department to generate an ROI of 7% per year before tax over the planned 25-year life of the current equipment. The methodology that DP World uses to price its services for its shipping customers is to arrive at a cost that includes the ROI plus all applicable costs. Therefore, the total cost per container that is charged to a customer includes total costs plus the required ROI per container. DP World's $200 million expansion readied Fairview to accept the largest vessels at sea, which are increasingly favored by shippers seeking to load more containers to reduce costs. DP World has two operating departments, with the first department called loading/unloading and the second department called container storage. DP World operates 24/7 and is open 365 days per year. DP World has the following container variable overhead costs,The port variable overhead costs are allocated to the operating departments using the direct method. By allocating the port's variable overhead costs, DP World is able to calculate a VMOH cost per container for each department, assume there is 365 days in each year including 2020.
Required: Complete your answers in an Excel document and create a separate tab for each of the following. Use the suggested template structures pictured below. 1) Allocate the Variable Manufacturing Overhead to the two operating departments using the following information.
Create a tab named Q1. Your answer should follow the following template. Hint the Total for Container Decontamination Department is between: $2,400,000
Below is the template of the answer sheet.
Please provide calculations.
For information,
Totals of Operating Departments Loading / Unloading is $18,104,000
Container Decontermination is $2,774,000
Number of containers handled per year for Loading/ unloading is 1,168,000 (3200 average *365 days)
Container decontermination is 146,000 (400 average *365 days) VMOH allocated cost per container for Loading / Unloading is $15.50 ($18,104,000/1,168,000)
VMOH allocated cost per container for Container Decontermination is $19.00 ($$2,774,000/146,000)
I need the solutions of how to get those totals ( $18,104,000 and $2,774,000)
Please provide calculations as well. Thank you.
DP World has the following container variable overhead costs: Support Departments Port Information Maintenance Services Operating Departments Loading / Container Unloading Decontamination Total Budgeted Port Variable Overhead costs before any interdepartmental cost allocations $9,000,000 $1,800,000 $9,804,000 $274,000 $20,878,000 Support Work Furnished by: Port Maintenance Budgeted labour hours Percentage Information Services Budgeted Computer Hours Percentage 233,600 40.0% 58,400 292,000 50.0% 584,000 100.0% 10.0% 50,000 5,000 10.0% 20,000 40.0% 25,000 50.0% 100.0% The port has become so cost effective that costs are now lower than any other port in North America. The costs for 2020 show the various rates related to the Fairview Container port as follows: Total Costs Totals 3,600 Load / Unload Powered Units 800 $25.00 $48.001 Load / Unload Non- Powered Units 2,400 $8.00 $32.00 Container Decontamination 400 $5.00 $5.00 Containers per day DM Costs per Container DML Costs per Container Variable Manufacturing Allocated Variable Joint Costs (Physical Measure to Load/Unload only) Fixed costs per container Period Operating costs per Year $36,500,000.00 $30.751 $2,117,000 $30.751 $6,351,000 $10.00 $1,460,000 $9,928,000 Support Departments Port Information Maintenance Services Operating Departments Loading/ Container Unloading Decontamination Total Budgeted Port Variable Overhead costs before any interdepartmental cost allocations $9,000,000 $1,200,000 $9,975,000 $265,000 $20,440,000 Support Work Furnished by: Port Maintenance Budgeted labour hours Percentage Information Services Budgeted Computer Hours Percentage 116,800 20.0% 408,800 70.0% 58,400 10.0% 584,000 100.0% 3,650 10.0% 10,950 30.0% 21,900 60.0% 36,500 100.0% DIRECT METHOD ANSWER Support Departments Port Information Maintenance Services Operating Departments Loading / Container Unloading Decontamination Total Budgeted Port Variable Overhead costs before any interdepartmental cost allocations $9,000,000 $1,200,000 $9,975,000 $265,000 $20,440,000 Support Work Furnished by: Port Maintenance Allocation of Port Maintenance Information Services Allocation of Information Services Totals Number of Containers Handled per Year VMOH Allocated Cost per Container $ $ $Step by Step Solution
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