8 value 1.00 points Hannibal Steel Company has a Transport Services Department t

Question

8 value 1.00 points 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 $286,100 per year, consisting of $0.24 per ton variable cost and $236,100 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 the following amounts of ore for the two plants: Northern Plant, 115,000 tons, Southern Plant, 50,200 tons. The Transport Services Department incurred $375,000 in cost during the year, of which $54,000 was variable cost and $321,000 was fixed cost. Required 1. Determine how much of the $54,000 in variable cost should be charged to each plant. Variable cost charged to Southern Plant12,048 2. Determine how much of the $321,000 in fixed cost should be charged to each plant Fixed cost charged to Northern Plant Fixed cost charged to Southern Plant 3. Should any of the $375,000 in the Transport Services Department cost not be charged to the plants? Unallocated cost

Explanation / Answer

8) 2) Fixed cost of $321,000 charged to

North Division = 56% x 321,000 = $179,760

South division = 44% x 321,000 = 141,240

3) Unallocated cost = 54,000 - 27,600 - 12,048 = $14,352

7)

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