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

question 6

Essay

Boulay 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 $34 per shipment.The Logistics Department's fixed costs are budgeted at $175,000 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 $147,840 and fixed costs totaled $189,610.The North Division had a total of 2,100 shipments and the South Division had a total of 2,100 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:

Interest Rate

The percentage charged on the total amount of borrowed money or paid on deposited funds, influencing the cost of loans and savings.

Initial Amount

The starting sum or value in financial transactions or calculations.

Stock Ownerships

The holding of shares in a company, which represents a claim on the company's assets and earnings.

Savings Accounts

Financial accounts that offer safe storage for customers' money with an interest-earning benefit, typically offered by banks and financial institutions.