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Calculation of a cost charged to a project.
The Logistics Department serves two operating divisions-an Atlantic Division and a Pacific Division. The variable costs of the Logistics Department are budgeted at $36 per shipment. The Logistics Department's fixed costs are budgeted at $234,000 for the year. The fixed costs of the Logistics Department are determined based on peak-period demand.
Percentage of Peak Period Capacity Required
Actual Shipments
Atlantic Division
30%
1,100
Pacific Division
70%
3,400
How much Logistics Department cost should be charged to the Atlantic Division at the end of the year for performance evaluation purposes?
a) $198,000
b) $109,800
c) $118,800
d) $96,800
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