Seattle Corporation Has Two Operating Divisions - Inland Division and Coast

question 86

Essay

Seattle Corporation has two operating divisions - Inland Division and Coast Division.The company's Customer Service Department provides services to both divisions.The variable costs of the Customer Service Department are budgeted at $29 per order. $$\begin{array} { | l | c | c | } \hline & \begin{array} { c } \text { Percentage of Peak Period } \\\text { Capacity Required }\end{array} & \begin{array} { c } \text { Budgeted } \\\text { Orders }\end{array} \\\hline \begin{array} { l } \text { Inland } \\\text { Division }\end{array} & 25 \% & 1,500 \\\hline \text { Coast } & 75 \% & 5,700 \\ \text { Division } & & \\\hline\end{array}$$ The Customer Service Department's fixed costs are budgeted at $381,600 for the year.The fixed costs of the Customer Service Department are determined based on the peak period orders.At the end of the year,actual Customer Service Department variable costs totaled $219,905 and fixed costs totaled $383,860.The Inland Division had a total of 1,520 orders and the Coast Division had a total of 5,690 orders for the year.Required:
a.Prepare a report showing how much of the Customer Service Department's costs should be charged to each of the operating divisions at the end of the year.b.How much of the actual Customer Service 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:

Variance

A measure of the spread between numbers in a dataset, indicating how much the individual data points differ from the mean of the data.

Confidence Interval

A segment of values, derived from analyzing a sample, that is likely to encapsulate the value of an undisclosed population attribute.

Sample Mean

The average of a subset of a population.

Margin of Error

A measure that indicates the range of values within which the true population parameter is expected to fall.