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

question 25

Multiple Choice

Levar 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 $73 per order.The Order Fulfillment Department's fixed costs are budgeted at $470,400 for the year.The fixed costs of the Order Fulfillment Department are determined based on the peak period orders. At the end of the year,actual Order Fulfillment Department variable costs totaled $621,600 and fixed costs totaled $473,970.The Consumer Division had a total of 1,840 orders and the Commercial Division had a total of 6,560 orders for the year.For purposes of evaluation performance,how much Order Fulfillment Department cost should be charged to the Commercial Division at the end of the year?

• A) $831,680
• B) $855,588
• C) $840,918
• D) $846,240

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Definitions:

Market-Equilibrium

A state where the quantity of goods supplied equals the quantity of goods demanded, resulting in a stable price.

Negative Externality

A cost that is suffered by a third party due to an economic transaction that they were not involved in.

Well-Being

The state of being comfortable, healthy, or happy, reflecting the overall quality of a person's life.

Compensation

The total amount of the monetary and non-monetary pay provided to an employee by an employer in return for work performed as required.