Question

Pacific Rim Industries is a diversified c mpany whose products are marketed both a mestically and internationally. The c。mpany's major product lines are furniture, sports equipment, and household appliances. At a recent meeting of Pacific Rim's board of directors there was a lengthy discussion on ways to improve overall corporate profitability. The members of the board decided that they required additional financial information ab ut individual corporate。perations in rder to target areas for improvement. Danielle Murphy, the controller, has been asked to provide additional data that would assist the board in its investigation. Murphy . believes that income statements, prepared along both product lines and geographic areas. W。uld provide the directors with the required insight into corporate operations. Murphy had several discussions with the division managers for each product line and compiled the following information from these meetings Product Lines Furniture Sports Appliances 198,000 Total 473,000 Production and sales in units Average selling price per unit Average variable manufacturing cost per unit Average variable selling expense per unit Fixed manufacturing overhead, 137,500 $ 10.00 20.00 23.00 16.50 2.50 137,500 5.00 3.00 10.00 2.50 excluding depreciation Depreciation of plant and equipment Administrative and selling expense $ 550,000 378,400 1,150,000 1. The division managers concluded that Murphy should allocate fixed manufacturing overhead to both product lines and geographic 2. Each of the division managers agreed that a reasonable basis for the allocation of depreciation on plant and equipment would be 3. There was little agreement on the allocation of administrative and selling expenses, so Murphy decided to allocate only those areas on the basis of the ratio of the variable costs expended to total variable costs the ratio of units produced per product line (or per geographical area) to the total number of units produced expenses that were traceable directly to a segment. For example, manufacturing staff salaries would be allocated to product lines and sales staff salaries would be allocated to geographic areas. Murphy used the following data for this allocation Manufacturing Staff Furniture Sports Appliances Sales Staff $125,000 United States 145,000 Canada 85,000 Asia $ 65,000 105,000 255,000 4. The division managers were able to provide reliable sales percentages for their product lines by geographical area

Need Help finding Manufacturing overhead and Depreciation.

Answer 1

Manufacturing OH
Manufacturing OH is applied both in the case of Geographical and Product Lines
on the basis of Variable Cost by Total Variable Cost
In Case of Geographical Alloacation
		United
		States	Canada	Asia	Total
Variable Cost		1691250	1361250	3135000	6187500
Manufacturing OH(DEP)		150333	121000	278667	550000
		550000*(1691250/	550000*(1361250/	550000*(3135000/
		6187500)	6187500)	6187500)
DEPRIACIATION
Depriciation is to be allocate on the basis of Units Produced in that Geographical Area
In Case of Geographical Alloacation
		United
		States	Canada	Asia	Total
Units Produced		147950	106700	218350	473000
Depriciation(ANS)		118360	85360	174680	378400
		(147950*378400/	(106700*378400/	(218350*378400/
		473000)	473000)	473000)

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