In 2020, the loading/unloading department for DP Worlds Prince Rupert facilities handled on average 3,200 of the
Question:
In 2020, the loading/unloading department for DP World’s Prince Rupert facilities handled on average 3,200 of the 45-foot containers per day. In 2020, the container decontamination department for DP World’s Prince Rupert facilities handled on average 400 of the 45-foot containers per day.
DP world is a company which creates revenues through two operating departments, the loading/unloading ,Of the $876 million invested by DP World into the Fairview container port, 90 percent ($788.4 million) was invested in the loading/unloading department assets and 5% ($43.8 million) was invested in the container decontamination department assets. The other 5% was invested in corporate office which has an expected zero return. The company expects the loading/unloading department to generate an ROI of 15% per year before tax over the planned 20-year life of the current equipment and expects the container decontamination department to generate an ROI of 7% per year before tax over the planned 25-year life of the current equipment. The methodology that DP World uses to price its services for its shipping customers is to arrive at a cost that includes the ROI plus all applicable costs. Therefore, the total cost per container that is charged to a customer includes total costs plus the required ROI per container. DP World's $200 million expansion readied Fairview to accept the largest vessels at sea, which are increasingly favored by shippers seeking to load more containers to reduce costs. DP World has two operating departments, with the first department called loading/unloading and the second department called container storage. DP World operates 24/7 and is open 365 days per year. DP World has the following container variable overhead costs,The port variable overhead costs are allocated to the operating departments using the direct method. By allocating the port's variable overhead costs, DP World is able to calculate a VMOH cost per container for each department, assume there is 365 days in each year including 2020.
Required: Complete your answers in an Excel document and create a separate tab for each of the following. Use the suggested template structures pictured below.
1) Allocate the Variable Manufacturing Overhead to the two operating departments using the following information.
Create a tab named “Q1”. Your answer should follow the following template. Hint – the Total for “Container Decontamination Department” is between:
$2,400,000 < answer < $2,800,000.
Below is the template of the answer sheet.
Please provide calculations.
For information,
Totals of Operating Departments Loading / Unloading is $18,104,000
Container Decontermination is $2,774,000
Number of containers handled per year for Loading/ unloading is 1,168,000 (3200 average *365 days)
Container decontermination is 146,000 (400 average *365 days)
VMOH allocated cost per container for Loading / Unloading is $15.50 ($18,104,000/1,168,000)
VMOH allocated cost per container for Container Decontermination is $19.00 ($$2,774,000/146,000)
I need the solutions of how to get those totals (
$18,104,000 and $2,774,000)
Please provide calculations as well. Thank you.