question archive Hannibal Steel Company has a Transport Services Department that provides trucks to haul ore from the company's mine to its two steel mills—the Northern Plant and the Southern Plant
Hannibal Steel Company has a Transport Services Department that provides trucks to haul ore from the company's mine to its two steel mills—the Northern Plant and the Southern Plant
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Hannibal Steel Company has a Transport Services Department that provides trucks to haul ore from the company's mine to its two steel mills—the Northern Plant and the Southern Plant. Budgeted costs for the Transport Services Department total $200,900 per year, consisting of $0.22 per ton variable cost and $150,900 fixed cost. The level of fixed cost is determined by peak-period requirements. During the peak period, the Northern Plant requires 56% of the Transport Services Department's capacity and the Southern Plant requires 44% During the year, the Transport Services Department actually hauled 119,000 tons of ore to the Northern Plant and 58,100 tons to the Southern Plant. The Transport Services Department incurred $371,000 in cost during the year, of which $52,100 was variable cost and $318,900 was fixed cost. Required: 1. How much of the Transport Services Department's variable costs should be charged to each plant? 2. How much of the $318,900 in fixed cost should be charged to each plant? 3. Should any of the Transport Services Department's actual total cost of $371,000 be treated as a spending variance and not charged to the plants? Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 How much of the Transport Services Department's variable costs should be charged to each plant? Variable cost charged to Northern Plant Variable cost charged to Southern Plant < Required 1 Required 2 >
