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

question 28

Multiple Choice

Erholm 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 $31 per shipment. The Logistics Department's fixed costs are budgeted at $411,800 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 $290,700 and fixed costs totaled $431,950. The Atlantic Division had a total of 3,900 shipments and the Pacific Division had a total of 5,100 shipments for the year. How much Logistics Department cost should be charged to the Pacific Division at the end of the year for performance evaluation purposes?

• A) $391,453
• B) $425,770
• C) $445,498
• D) $409,502

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Definitions:

Charles Spearman

A British psychologist known for his work in statistics and intelligence, notably for his theory that human intelligence is largely governed by a general intelligence factor, g.

General Intelligence

A hypothesis positing a wide-ranging cognitive capability that impacts outcomes on tests of intellectual abilities.

Various Abilities

A term referring to the diverse range of skills or competences that different individuals possess.

Sensory Systems

The parts of the body involved in receiving and processing sensory information from the environment, including sight, hearing, taste, touch, and smell.