Assignment 2: Course Project - AU ACC202

George-Pacific LLC is one of the world’s largest manufacturers and distributors of paper, tissue, paper and toilet towel dispensers, and related chemicals among other products related to paper and pulp. The manufacturer has a division specialized on softwood fiber. George-Pacific LLC is reacting to the rise in demand for stronger and light-weight packaging. The manufacturer is also is seeing the need to balance out the diminishing quality of recycled fiber which has led to an increase in demand for softwood fiber. The hardwood demand growth rate still remains higher than that of softwood because of limited capacity to add the softwood division. George-Pacific LLC has introduced the softwood division that deals with the manufacturing and distribution of softwood fiber products.

Accounting frameworks for George-Pacific LLC require each division to allocate certain overhead costs to produced goods. George-Pacific LLC can either use administrative overhead or the manufacturing overhead (Olhager & Myrelid, 2015). George-Pacific LLC cab best use the manufacturing overhead as the costs the company incurs expect the direct costs. Manufacturing overhead can include the depreciation of factory equipment, maintenance of factory and production equipment, and quality inspection and control among other costs. The administrative overhead will include costs not involved in the development or production of the softwood fiber products.

The softwood division can use the product costing which can be supported by real-time costing and transportation costing. The product costing can the manufacturer’s specific function for recipe and grade specification management, standard grade costing, actual grade costing, short and long-term cost and consumption forecasting based on block and sale schedules. Direct materials of the softwood division are logs from softwood trees, for example, the Jack Pine and the Balsam Fir trees. Direct labor costs are in the debarking, sawing, re-sawing, edging, trimming, planning, and in the final trimming process. Manufacturing overhead costs for the softwood division involves all costs going through the assemble department expect the direct costs.

References Olhager, J., & Myrelid, A. (2015). Applying modern accounting techniques in complex manufacturing. Industrial Management & Data Systems, 402-418.