(Appendix 12B)Yacavone Corporation Has Two Operating Divisions-A Consumer Division and a Commercial

question 5

Multiple Choice

(Appendix 12B) Yacavone Corporation has two operating divisions-a Consumer Division and a Commercial Division.The company's Customer Service Department provides services to both divisions.The variable costs of the Customer Service Department are budgeted at $43 per order.The Customer Service Department's fixed costs are budgeted at $274, 400 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 $216, 090 and fixed costs totaled $292, 890.The Consumer Division had a total of 1, 310 orders and the Commercial Division had a total of 3, 590 orders for the year.For performance evaluation purposes, how much actual Customer Service Department cost should NOT be charged to the operating divisions at the end of the year?

• A)$18, 490
• B)$5, 390
• C)$23, 880
• D)$0

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Definitions:

Employee's Performance

The job activities and outcomes that an employee accomplishes in accordance to the expectations and standards of the organization.

Individual Incentive Plan

A compensatory strategy intended to boost individual employee performance through specific rewards.

Piecework

A payment structure where employees are paid a fixed rate for each unit of work completed, rather than by hourly wages.

Profit-Sharing Plans

Employee benefit plans under which a company shares a portion of its profits with its employees, usually distributed based on set criteria such as seniority or salary level.