(Appendix 11B) Wollan Corporation has two operating divisions--an East Division and a West Division. The company's Logistics Department services both divisions. The variable costs of the Logistics Department are budgeted at $44 per shipment. The Logistics Department's fixed costs are budgeted at $237,600 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 $332,880 and fixed costs totaled $253,960. The East Division had a total of 4,300 shipments and the West Division had a total of 3,000 shipments for the year.
-How much actual Logistics Department cost should not be allocated to the operating divisions at the end of the year?
A) $28,040
B) $0
C) $16,360
D) $11,680

Question

(Appendix 11B) Wollan Corporation has two operating divisions--an East Division and a West Division. The company's Logistics Department services both divisions. The variable costs of the Logistics Department are budgeted at $44 per shipment. The Logistics Department's fixed costs are budgeted at $237,600 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 $332,880 and fixed costs totaled $253,960. The East Division had a total of 4,300 shipments and the West Division had a total of 3,000 shipments for the year.
-How much actual Logistics Department cost should not be allocated to the operating divisions at the end of the year?
A) $28,040 
B) $0 
C) $16,360 
D) $11,680

Quizplus · Accepted Answer

11ea7761_1686_13fa_81a5_ab4078670019_TB2580_00 ¹7,300 actual shipments × $44 per shipment = $321,200 Total spending variance not charged to the operating divisions = $11,680 + $16,360 = $28,040

(Appendix 11B) Wollan Corporation Has Two Operating Divisions--An East Division