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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 fanitorial 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 Administration Log Yard Milling Drying Packaging Hours worked 11,000 9,720 8,100 25,920 16,200 21.060 Number of employees 10 12 Department costs $193,600 $237,900 $340,950 $521,400 $476,450 $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 the Maintenance ESC ipboard Font Paragraph Styles ry 1 2 ! 3 1 4 . . . 1 5 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 Packaging Maintenance Administration Log Yard 25,920 21,060 8,100 16,200 Hours worked 9,720 11,000 12 8 4 10 6 4 Number of employees 246,400 476,450 340,950 $ 521,400 237,900 193,600 Department cost $ Maintenance 259,600 x Administration $ s Final department costs Foad Pace 16+1 TOSHIET 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 Thousand Weight Weighted Weighted 9 of Final Department Cost Allocation Board Feet Factor Thous. Bd. Ft. Board Feet Costs to Product Line Log Yard: Hardwood 300 1 300 25 x 360,000 x 106,913 X Softwood 000 1 1 900 75 X Total Log Yard 1,200 2 1,200 100 % Milling: Hardwood 300 27 2 600 40 Softwood 900 1 900 60 X 1,200 7 Total Milling 3 100 1,500 Drying: Hardwood 300 300 25 X 900 Softwood 1 900 75 2 1,200 1,200 100 Total Drying bhabhi Packaging: 300 1 25 Hardwood 300 25 900 1 Softwood 900 1,200 100V 2 1,200 Total Packaging Page 10 word TOSHIE 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 Percentage of By-product Portion of By- Board Feet Board Feet Revenue product Revenue Hardwood 300 25 $100,000 75 X Softwood 900 75 100,000 Total 1,200 100 % Cost per Product Line Hardwood Softwood Log Yard 106,913 X Milling Drying Packaging Subtotal portion of By product revenue 5 Total cost per product line Page 1 of 1 word TOSHIB