Norgaard Corporation Has Two Operating Divisions: a Consumer Division and a Commercial

Multiple Choice

Norgaard 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 $70 per order. The Customer Service Department's fixed costs are budgeted at $245,000 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 $348,920 and fixed costs totaled $259,790. The Consumer Division had a total of 1,520 orders and the Commercial Division had a total of 3,360 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) $14,790
B) $22,110
C) $7,320
D) $0