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

question 10

Multiple Choice

Fickling 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 $51 per order. The Order Fulfillment Department's fixed costs are budgeted at $484,000 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 $460,404 and fixed costs totaled $493,700. The Consumer Division had a total of 2,430 orders and the Commercial Division had a total of 6,390 orders for the year.
-How much Order Fulfillment Department cost should be allocated to the Commercial Division at the end of the year?

• A) $676,543
• B) $679,148
• C) $691,239
• D) $664,690

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Definitions:

Marginal Product Labor

The additional output produced as a result of employing one more unit of labor, holding other inputs constant.

Marginal Product Capital

This refers to the additional output produced as a result of using one more unit of capital, holding other inputs constant.

Maximum Profit Equilibrium

The point at which a firm achieves its highest level of profit given its production and cost constraints.

Price Labor

The cost associated with hiring workers or the wage that employers pay to their employees for their labor.