Cost allocation to divisions. Bergen Corporation has three divisions: pulp, paper, and fibers. Bergen's new controller, David Fisher, is reviewing the allocation of fixed corporate-overhead costs to the three divisions. He is presented with the following information for each division for 2017: Pulp $19,600,000 Paper $34,200,000 $51,000,000 15,600,000 4,000,000 $ 6,000,000 $14,600,000 $19,400,000 300 70,680 Fibers Revenues Direct manufacturing costs Division administrative costs 7,000,000 22,200,000 6,600,000 9,400,000 Division margin Number of employees Floor space (square feet) 600 1,100 202,920 106,400 Until now, Bergen Corporation has allocated fixed corporate-overhead costs to the divisions on the basis of division margins. Fisher asks for a list of costs that comprise fixed corporate overhead and suggests the following new allocation bases: Fixed Corporate-Overhead Costs Human resource management Facility Corporate administration Suggested Allocation Bases $ 4,600,000 Number of employees 6,400,000 Floor space (square feet) 9,200,000 $20,200,000 Division administrative costs Total

Cost allocation to divisions. Bergen Corporation has three divisions: pulp, paper, and fibers. Bergen's new controller, David Fisher, is reviewing the allocation of fixed corporate-overhead costs to the three divisions. He is presented with the following information for each division for 2017: Pulp $19,600,000 Paper $34,200,000 $51,000,000 15,600,000 4,000,000 $ 6,000,000 $14,600,000 $19,400,000 300 70,680 Fibers Revenues Direct manufacturing costs Division administrative costs 7,000,000 22,200,000 6,600,000 9,400,000 Division margin Number of employees Floor space (square feet) 600 1,100 202,920 106,400 Until now, Bergen Corporation has allocated fixed corporate-overhead costs to the divisions on the basis of division margins. Fisher asks for a list of costs that comprise fixed corporate overhead and suggests the following new allocation bases: Fixed Corporate-Overhead Costs Human resource management Facility Corporate administration Suggested Allocation Bases $ 4,600,000 Number of employees 6,400,000 Floor space (square feet) 9,200,000 $20,200,000 Division administrative costs Total

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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