Levar Corporation Has Two Operating Divisions--A Consumer Division and a Commercial

question 21

Multiple Choice

Levar Corporation has two operating divisions--a Consumer Division and a Commercial Division. The company's Order Fulfillment Department provides services to both divisions. The variable costs of the Order Fulfillment Department are budgeted at $73 per order. The Order Fulfillment Department's fixed costs are budgeted at $470,400 for the year. The fixed costs of the Order Fulfillment Department are determined based on the peak period orders. At the end of the year, actual Order Fulfillment Department variable costs totaled $621,600 and fixed costs totaled $473,970. The Consumer Division had a total of 1,840 orders and the Commercial Division had a total of 6,560 orders for the year. For purposes of evaluation performance, how much Order Fulfillment Department cost should be charged to the Commercial Division at the end of the year?

• A) $831,680
• B) $855,588
• C) $840,918
• D) $846,240

Recognize the implications of investment decisions on financial performance indicators.

Understand the principles of performance evaluation and the role of controllable versus non-controllable factors.

Differentiate between intrinsic and extrinsic rewards and understand their impact on motivation.

Understand the expectancy theory of motivation and its components.

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Definitions:

Market Interest Rates

The prevailing rate at which borrowers and lenders agree to engage in transactions of debt securities in the financial markets.

Creative Destruction

A concept in economics which suggests that new innovations destroy old industries and methods, leading to new sectors and opportunities for growth.

Start-Up Firms

Newly established businesses often characterized by innovation, growth potential, and a scalable business model.

Dominant Firms

Are companies that have a major share of the market sales, setting them apart from their competitors.