Cannata Corporation Has Two Operating Divisions--A North Division and a South

question 192

Essay

Cannata Corporation has two operating divisions--a North Division and a South Division. The company's Logistics Department services both divisions. The variable costs of the Logistics Department are budgeted at $32 per shipment. The Logistics Department's fixed costs are budgeted at $372,300 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 $335,000 and fixed costs totaled $382,850. The North Division had a total of 4,700 shipments and the South Division had a total of 5,300 shipments for the year.Required:a. Prepare a report showing how much of the Logistics Department's costs should be charged to each of the operating divisions at the end of the year.b. How much of the actual Logistics Department costs should not be charged to the operating divisions at the end of the year? Who should be held responsible for these uncharged costs?

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Definitions:

Unit Costs

The cost incurred by a company to produce, store, and sell one unit of a particular product or service.

Raw Materials Inventory

The stock of unprocessed materials that are used in manufacturing to produce goods, representing a current asset on the balance sheet.

Materials Requisitioned

The process and documentation involved in requesting and withdrawing materials from the inventory for use in production.

Job Order Costing

An accounting method used to assign costs to specific jobs or batches, ideal for manufacturing processes or services that are distinct or custom.