Marazzi 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 $47 per shipment. The Logistics Department's fixed costs are budgeted at $328,600 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 $333,270 and fixed costs totaled $340,240. The East Division had a total of 2,300 shipments and the West Division had a total of 4,600 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)$0
B)$20,610
C)$11,640
D)$8,970

Question

Marazzi 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 $47 per shipment. The Logistics Department's fixed costs are budgeted at $328,600 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 $333,270 and fixed costs totaled $340,240. The East Division had a total of 2,300 shipments and the West Division had a total of 4,600 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)$0 
B)$20,610 
C)$11,640 
D)$8,970

Quizplus · Accepted Answer

The actual Logistics Department cost of $30,250 should be reduced by the amount of the ending inventory of supplies, $8,970, and the amount of the prepaid insurance, $20,610. This leaves $11,640 of actual Logistics Department cost that should not be allocated to the operating divisions at the end of the year.

Marazzi Corporation Has Two Operating Divisions-An East Division and a West