The image contains a table designed to allocate support costs among various departments. The goal is to distribute these costs to both support and production departments using specific allocation bases like hours worked and the number of employees. Allocated amounts are to be rounded to the nearest whole dollar, and zero should be entered if applicable.### Table Explanation**Support Departments:**1. **Maintenance** - Hours Worked: 11,000 - Number of Employees: 6 - Department Cost: $193,6002. **Administration** - Hours Worked: 9,720 - Number of Employees: 4 - Department Cost: $237,9003. **Log Yard** - Hours Worked: 8,160 - Number of Employees: 4 - Department Cost: $340,950**Production Departments:**1. **Milling** - Hours Worked: 25,920 - Number of Employees: 102. **Drying** - Hours Worked: 16,200 - Number of Employees: 123. **Packaging** - Hours Worked: 21,060 - Number of Employees: 8### Additional Data Fields:- Maintenance: - Final Department Costs: $259,600 (Input required)- Administration: - Field for input cost allocation (currently blank).The table implies the need for students to correctly allocate costs based on the outlined variables, providing a practical exercise in cost accounting practices and allocation methods used in business finance. **ForestLand Wood Products: Cost Allocation Case Study**ForestLand Wood Products manufactures lumber and wood components, with two main product lines: Hardwood and Softwood. Hardwoods are utilized for flooring, cabinetry, paneling, doors, and trimwork. Softwoods serve in walls, joists, planks, rafters, beams, posts, decking, subflooring, and concrete forms. Additionally, ForestLand sells wood shavings, a by-product, which are used for farm and industrial purposes and processed into pellets and fiberboard. Revenues from by-products offset costs, and the revenue is allocated based on the percentage of the product produced.**Three-Year Project with ForestLand**Your firm has been retained by ForestLand for three years to allocate support department costs accurately. The reciprocal services method will be used under your manager's instructions. You find that the Hardwood line produces 300 thousand board feet of product and Softwood produces 900 thousand board feet. The labor cost per thousand board feet is double for Hardwood compared to Softwood. Other production costs are consistent for both.**Support Departments**ForestLand has two support departments:1. **Maintenance**: Maintains equipment and janitorial duties. It is more heavily used in hardwood production. Cost driver: hours worked.2. **Administration**: Includes essential administrative roles. Cost driver: number of employees.**Cost Analysis Table**The following data represents the cost allocation across departments:| | Maintenance | Administration | Log Yard | Drying | Packaging ||---------------|-------------|----------------|----------|---------|-----------|| **Hours Worked** | 11,000 | 9,720 | 8,100 | 16,200 | 21,060 || **Number of Employees** | 6 | 4 | 5 | 12 | 8 || **Department Costs** | $193,600 | $237,900 | $340,950 | $476,450 | $245,400 |The goal is to determine proportional usage for each support department's cost driver among the rest of the departments.**Next Steps**Calculate the proportional allocation of the support department costs to the production departments using the provided tables and the reciprocal services method.

Cost allocation is a method of delivering assistance to the cost centres of a shared service organisation that supplies a product or service.Workings: Let, Total Maintenance Cost be X and the Total Administration Cost be Y. X=$193,600+0.15Y Y=$237,900+0.12X Now, X=$193,600+0.15×$237,900+0.12XX=$193,600+$35,685+0.018X0.982X=$229,285X=$233,488 And, Y=$237,900+0.12XY=$237,900+0.12×$233,488Y=$265,919Workings:Answer:

Business

Accounting

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". Production Departments Support Departments Log Yard Milling Drying Packaging Maintenance Administration 8,100 V 25,920 V 16,200 V 21,060 11,000V 9,720 Hours worked 10 12 6. Number of employees 246,400 340,950 521,400 476,450 24 193,600 237,900 Department cost Maintenançe 259,600 Administration Final department costs

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". Production Departments Support Departments Log Yard Milling Drying Packaging Maintenance Administration 8,100 V 25,920 V 16,200 V 21,060 11,000V 9,720 Hours worked 10 12 6. Number of employees 246,400 340,950 521,400 476,450 24 193,600 237,900 Department cost Maintenançe 259,600 Administration Final department costs

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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