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

question 22

Multiple Choice

Azotea 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 $56 per order. The Order Fulfillment Department's fixed costs are budgeted at $233,700 for the year. The fixed costs of the Order Fulfillment Department are budgeted based on the peak-period orders. At the end of the year, actual Order Fulfillment Department variable costs totaled $237,390 and fixed costs totaled $239,140. The Consumer Division had a total of 1,240 orders and the Commercial Division had a total of 2,860 orders for the year.
How much actual Order Fulfillment Department cost should not be allocated to the operating divisions at the end of the year?

• A) $7,790
• B) $5,440
• C) $13,230
• D) $0

---

Definitions:

Cost-benefit Analysis

A systematic approach to estimate the strengths and weaknesses of alternatives, used to determine the best option in terms of benefits outweighing costs.

Duty-based Ethics

An ethical theory that emphasizes duties or moral rules as the basis for judging the ethicality of actions.

Corporate Social Responsibility

A business approach that involves participating in initiatives that benefit society, including ethical, environmental, and philanthropic efforts.

Corporate Social Responsibility

A business model that incorporates self-regulation into a company's business model to positively impact society socially, economically, and environmentally.