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Scuderi Corporation has two operating divisions-an Inland Division and a Coast Division. The
company's Customer Service Department provides services to both divisions. The variable costs
of the Customer Service Department are budgeted at $37 per order. The Customer Service
Department's fixed costs are budgeted at $434,000 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 $303,958 and
fixed costs totaled $436,740. The Inland Division had a total of 2,180 orders and the Coast
Division had a total of 5,840 orders for the year.
Required:
Calculate the amount of the Customer Service Department's costs that should be charged to each
of the operating divisions at the end of the year.
How much of the actual Customer Service Department costs should not be charged to the
operating divisions at the end of the year?
Scuderi Corporation has two operating divisions-an Inland Division and a Coast Division. The
company's Customer Service Department provides services to both divisions. The variable costs
of the Customer Service Department are budgeted at $37 per order. The Customer Service
Department's fixed costs are budgeted at $434,000 for the year. The fixed costs of the Customer
Service Department are determined based on the peak period orders.
Solution
Amount to be charged to Inland Division Coast Division Variable Cost  = 303958/8020=
37.9 37.9*2180 82622 37.9*5840 2221336 Fixed Cost = 436740/8020= 54.45 54.45*2180
118715 54.45*5840 318025
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Scuderi Corporation has two operating divisions-an Inland Division and.docx

  • 1. Scuderi Corporation has two operating divisions-an Inland Division and a Coast Division. The company's Customer Service Department provides services to both divisions. The variable costs of the Customer Service Department are budgeted at $37 per order. The Customer Service Department's fixed costs are budgeted at $434,000 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 $303,958 and fixed costs totaled $436,740. The Inland Division had a total of 2,180 orders and the Coast Division had a total of 5,840 orders for the year. Required: Calculate the amount of the Customer Service Department's costs that should be charged to each of the operating divisions at the end of the year. How much of the actual Customer Service Department costs should not be charged to the operating divisions at the end of the year? Scuderi Corporation has two operating divisions-an Inland Division and a Coast Division. The company's Customer Service Department provides services to both divisions. The variable costs of the Customer Service Department are budgeted at $37 per order. The Customer Service Department's fixed costs are budgeted at $434,000 for the year. The fixed costs of the Customer Service Department are determined based on the peak period orders. Solution Amount to be charged to Inland Division Coast Division Variable Cost  = 303958/8020= 37.9 37.9*2180 82622 37.9*5840 2221336 Fixed Cost = 436740/8020= 54.45 54.45*2180 118715 54.45*5840 318025