Hannibal Steel Company has a Transport Services Department that provides trucks
ID: 2459913 • Letter: H
Question
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 $234,800 per year, consisting of $0.17 per ton variable cost and $184,800 fixed cost. The level of fixed cost is determined by peak-period requirements. During the peak period, the Northern Plant requires 61% of the Transport Services Department’s capacity and the Southern Plant requires 39%.
During the year, the Transport Services Department actually hauled the following amounts of ore for the two plants: Northern Plant, 129,000 tons; Southern Plant, 66,400 tons. The Transport Services Department incurred $372,000 in cost during the year, of which $52,400 was variable cost and $319,600 was fixed cost.
Determine how much of the $52,400 in variable cost should be charged to each plant.
Determine how much of the $319,600 in fixed cost should be charged to each plant.
How much amount out of $372,000 in the Transport Services Department cost should not be charged to the plants?
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 $234,800 per year, consisting of $0.17 per ton variable cost and $184,800 fixed cost. The level of fixed cost is determined by peak-period requirements. During the peak period, the Northern Plant requires 61% of the Transport Services Department’s capacity and the Southern Plant requires 39%.
Explanation / Answer
3) Variable cost not charged to plants = 52400 - 33218 = 19182
of the total cost of $ 372000 . 19182 should not charged to plants
Northern southern Total 1 ) .17 *129000 = 21930 .17 *66400 = 11288 33218 2 ) 319600* .61 = 194956 319600*.39= 124644 319600Related Questions
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