A New and Revolutionary Method of Allocating Costs to Veneer Grades

The cost accounting method referred to as “Cost Basis 3/8-inch” is inadequate because it does not recognize cost differences due to grades of panels produced. A new method is proposed based on cost allocation factors for veneer grades, plus prorated indirect costs. Many millions of dollars are lost every year by the plywood industry because of the improper utilization of veneers actually recovered from logs. Under the new system, it is possible to compute the excessive cost of downgrading. For example, the difference in cost between a l/8-inch “C” sheet and a l/8-inch “D” sheet is about $3.00 per M; this would be the excessive cost if only one “C” sheet were substituted for a “D” sheet in a given panel.

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