Question
A corporation has two operating divisions--an Atlantic Division and a Pacific Division. The company's Logistics Department services both divisions. The variable costs of the Logistics
A corporation has two operating divisions--an Atlantic Division and a Pacific Division. The company's Logistics Department services both divisions. The variable costs of the Logistics Department are budgeted at $38 per shipment. The Logistics Department's fixed costs are budgeted at $418,800 for the year. The fixed costs of the Logistics Department are determined based on peak-period demand.
At the end of the year, actual Logistics Department variable costs totaled $297,700 and fixed costs totaled $438,950. The Atlantic Division had a total of 4,600 shipments and the Pacific Division had a total of 5,800 shipments for the year. How much Logistics Department cost should be charged to the Pacific Division at the end of the year for performance evaluation purposes?
Percentage of Peak Period Capacity Required Budgeted Shipments 2,600 5,900 Atlantic Division Pacific Division 30% 70%Step by Step Solution
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