Herriott Corporation Has Two Operating Divisions-An Atlantic Division and a Pacific

Multiple Choice

Herriott Corporation has two operating divisions-an Atlantic Division and a Pacific Division. The company's Logistics Department services both divisions. The variable costs of the Logistics Department are budgeted at $43 per shipment. The Logistics Department's fixed costs are budgeted at $209,000 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 $246,960 and fixed costs totaled $217,870. The Atlantic Division had a total of 3,000 shipments and the Pacific Division had a total of 2,600 shipments for the year. For performance evaluation purposes, how much actual Logistics Department cost should NOT be charged to the operating divisions at the end of the year?

A) $8,870
B) $15,030
C) $6,160
D) $0