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

question 6

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 Order Fulfillment Department cost should be allocated to the Commercial Division at the end of the year?

• A) $300,380
• B) $309,078
• C) $332,409
• D) $323,180

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Definitions:

Customer G

This does not represent a widely recognized key term in a generic context, so it is not applicable for a general definition.

Time-Driven Activity-Based Costing

An approach to Activity-Based Costing that uses time as the main driver for allocating overhead costs to products or services.

Customer Cost Analysis

An evaluation method that determines the total cost of acquiring, servicing, and retaining a customer.

Order Fulfillment Department

The department responsible for processing customer orders, including picking, packing, and shipping goods.