Gretter 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 $36 per shipment.The Logistics Department's fixed costs are budgeted at $399,600 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 $305,040 and fixed costs totaled $418,680.The Atlantic Division had a total of 2,600 shipments and the Pacific Division had a total of 5,600 shipments for the year.For performance evaluation purposes,how much actual Logistics Department cost should NOT be charged to the operating divisions at the end of the year?
A) $28,920
B) $9,840
C) $19,080
D) $0

Question

Gretter 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 $36 per shipment.The Logistics Department's fixed costs are budgeted at $399,600 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 $305,040 and fixed costs totaled $418,680.The Atlantic Division had a total of 2,600 shipments and the Pacific Division had a total of 5,600 shipments for the year.For performance evaluation purposes,how much actual Logistics Department cost should NOT be charged to the operating divisions at the end of the year?
A) $28,920 
B) $9,840 
C) $19,080 
D) $0

Quizplus · Accepted Answer

11ea7761_1684_6641_81a5_2bad29251a2c_TB2580_00 ¹8,200 actual shipments × $36 per shipment = $295,200 Total spending variance not charged to the operating divisions = $9,840 + $19,080 = $28,920

Gretter Corporation Has Two Operating Divisions--An Atlantic Division and a Pacific