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
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
Allocate 2017 fixed costs using the allocation bases suggested by Fisher. What is each division’s operating margin percentage under the new allocation scheme?
![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](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F5d36f0e7-31da-4ae4-a1d7-2cf54cd4eb6d%2Fc989e612-291b-423c-8808-990888803910%2Fq2jjmg.jpeg&w=3840&q=75)
Transcribed Image Text: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
Expert Solution
![](/static/compass_v2/shared-icons/check-mark.png)
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 2 steps with 5 images
![Blurred answer](/static/compass_v2/solution-images/blurred-answer.jpg)
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Recommended textbooks for you
![FINANCIAL ACCOUNTING](https://compass-isbn-assets.s3.amazonaws.com/isbn_cover_images/9781259964947/9781259964947_smallCoverImage.jpg)
![Accounting](https://www.bartleby.com/isbn_cover_images/9781337272094/9781337272094_smallCoverImage.gif)
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
![Accounting Information Systems](https://www.bartleby.com/isbn_cover_images/9781337619202/9781337619202_smallCoverImage.gif)
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
![FINANCIAL ACCOUNTING](https://compass-isbn-assets.s3.amazonaws.com/isbn_cover_images/9781259964947/9781259964947_smallCoverImage.jpg)
![Accounting](https://www.bartleby.com/isbn_cover_images/9781337272094/9781337272094_smallCoverImage.gif)
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
![Accounting Information Systems](https://www.bartleby.com/isbn_cover_images/9781337619202/9781337619202_smallCoverImage.gif)
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
![Horngren's Cost Accounting: A Managerial Emphasis…](https://www.bartleby.com/isbn_cover_images/9780134475585/9780134475585_smallCoverImage.gif)
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
![Intermediate Accounting](https://www.bartleby.com/isbn_cover_images/9781259722660/9781259722660_smallCoverImage.gif)
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
![Financial and Managerial Accounting](https://www.bartleby.com/isbn_cover_images/9781259726705/9781259726705_smallCoverImage.gif)
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education