Larubbio Corporation has two operating divisions--an Inland Division and a Coast Division. The company's Customer Service Department provides services to both divisions. The variable costs of the Customer Service Department are budgeted at $23 per order. The Customer Service Department's fixed costs are budgeted at $407,100 for the year. The fixed costs of the Customer Service Department are determined based on the peak-period orders. At the end of the year, actual Customer Service Department variable costs totaled $168,560 and fixed costs totaled $426,700. The Inland Division had a total of 2,110 orders and the Coast Division had a total of 4,770 orders for the year.
Required:
a. Prepare a report showing how much of the Customer Service Department's costs should be charged to each of the operating divisions at the end of the year.
b. How much of the actual Customer Service 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?

Question

Larubbio Corporation has two operating divisions--an Inland Division and a Coast Division. The company's Customer Service Department provides services to both divisions. The variable costs of the Customer Service Department are budgeted at $23 per order. The Customer Service Department's fixed costs are budgeted at $407,100 for the year. The fixed costs of the Customer Service Department are determined based on the peak-period orders.  At the end of the year, actual Customer Service Department variable costs totaled $168,560 and fixed costs totaled $426,700. The Inland Division had a total of 2,110 orders and the Coast Division had a total of 4,770 orders for the year.
Required:
a. Prepare a report showing how much of the Customer Service Department's costs should be charged to each of the operating divisions at the end of the year.
b. How much of the actual Customer Service 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?

Quizplus · Accepted Answer

The Answer of Larubbio Corporation has two operating divisions--an Inland Division and a Coast Division. The company's Customer Service Department provides services to both divisions. The variable costs of the Customer Service Department are budgeted at $23 per order. The Customer Service Department's fixed costs are budgeted at $407,100 for the year. The fixed costs of the Customer Service Department are determined based on the peak-period orders.  At the end of the year, actual Customer Service Department variable costs totaled $168,560 and fixed costs totaled $426,700. The Inland Division had a total of 2,110 orders and the Coast Division had a total of 4,770 orders for the year.
Required:
a. Prepare a report showing how much of the Customer Service Department's costs should be charged to each of the operating divisions at the end of the year.
b. How much of the actual Customer Service 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?

Larubbio Corporation Has Two Operating Divisions--An Inland Division and a Coast