Using the rounded amounts from the support cost allocation table (previous task), complete the folloving table to allocate the production department costs to each product line. Round allocated amounts to the nearest whole dollar. Thousand Weight Weighted Weighted 6 of Final Department Cost Allocation Board Feet Factor Thous. Bd. Ft. Board Feet Costs to Product Line Log Yardı Hardvood 300V 300 1 25 % x 390,891V 97,723 Softwood 900 V 900V 75 V 390,891V 293,168 Total Log Yard 1,200 1,200 100V % 390,891 Milling: Hardwood 300 600V 40 x 662,596 270,357 x Softwood 900 900 60 v 602,596 405,535 X Total Milling 1,200 1,500 100 662,596 Drying Hardvood 150,909 x 150.000x 300 300 25 602,924 Softwood. 900 1. 900 75 602,924 V Total Drying 1,200V 0 N 607,924 1,200 100 Packagings Hardviood 300 300 V 25 360,291 92,827 X 1. KI A 900 75 360,291 75,000 x Softvrood 900 1,200 V 1,200v 100 s 360,201 Total Packaging
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
There are two support departments: maintenance and administration. The maintenance department is responsible for maintaining all equipment and janitorial 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 | 6 | 4 | 4 | 10 | 12 | 8 | |
| Department costs | $193,600 | $237,900 | $340,950 | $521,400 | $476,450 | $246,400 |
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