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

question 23

Multiple Choice

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

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Definitions:

Square Feet

Square feet is a measure of area used primarily in the United States, representing the size of a space equal to a square with sides of one foot in length.

Linear Model

A statistical approach to modeling the relationship between one or more independent variables and a dependent variable by fitting a linear equation to observed data.

Logarithm

The exponent by which a base must be raised to yield a given number, commonly used in mathematical and scientific calculations.

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A type of tree belonging to the genus Acer, known for its distinctive leaf shape and for producing maple syrup.