Cost Allocation Between Departments Cannata Corporation has two operating divisions a North Division and a South Division The company's Logistics Department services both divisions The variable costs of the Logistics Department are budgeted at $32 per shipment The Logistics Department's fixed costs are budgeted at $372,300 for the year The fixed costs of the Logistics Department are determined based on peak period demand Percentage of Peak Period Capacity Required Budgeted Shipments North Division 25 1,700 South Division 75 5,600 At the end of the year, actual Logistics Department variable costs totaled $335,000 and fixed costs totaled $382,850 The North Division had a total of 4,700 shipments and the South Division had a total of 5,300 shipments for the year Required a Prepare a report showing how much of the Logistics Department's costs should be charged to each of the operating divisions at the end of the year b How much of the actual Logistics Department costs should not be charged to the operating divisions at the end of the year Who should be held responsible for these uncharged costs NO IMAGE PLEASE

The Answer is in the image, click to view ...

Answered step by step

Verified Expert Solution

Link Copied!

Question

1 Approved Answer

Posted on Jul 14, 2024

Cost Allocation Between Departments Cannata Corporation has two operating divisions-a North Division and a South Division. The company's Logistics Department services both divisions. The variable

Cost Allocation Between Departments

Cannata Corporation has two operating divisions-a North Division and a South Division. The company's Logistics Department services both divisions. The variable costs of the Logistics Department are budgeted at $32 per shipment. The Logistics Department's fixed costs are budgeted at $372,300 for the year. The fixed costs of the Logistics Department are determined based on peak-period demand.

	Percentage of Peak Period Capacity Required	Budgeted Shipments
North Division.......	25%	1,700
South Division.......	75%	5,600

At the end of the year, actual Logistics Department variable costs totaled $335,000 and fixed costs totaled $382,850. The North Division had a total of 4,700 shipments and the South Division had a total of 5,300 shipments for the year.

Required:

a. Prepare a report showing how much of the Logistics Department's costs should be charged to each of the operating divisions at the end of the year.

b. How much of the actual Logistics Department costs should not be charged to the operating divisions at the end of the year? Who should be held responsible for these uncharged costs?

NO IMAGE PLEASE