Hannibal Steel Company's Transport Services Department 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 $322,200 per year, consisting of $0.23 per ton variable cost and $272,200 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 121,000 tons of ore to the Northern Plant and 60,900 tons to the Southern Plant. The Transport Services Department incurred $368,000 in cost during the year, of which $52,300 was variable and $315,700 was fixed.
Hannibal Steel Company's Transport Services Department 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 $322,200 per year, consisting of $0.23 per ton variable cost and $272,200 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 121,000 tons of ore to the Northern Plant and 60,900 tons to the Southern Plant. The Transport Services Department incurred $368,000 in cost during the year, of which $52,300 was variable and $315,700 was fixed.
Managerial Accounting
15th Edition
ISBN:9781337912020
Author:Carl Warren, Ph.d. Cma William B. Tayler
Publisher:Carl Warren, Ph.d. Cma William B. Tayler
Chapter8: Budgeting
Section: Chapter Questions
Problem 4CMA: Krouse Company produces two products, forged putter heads and laminated putter heads, which are sold...
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VIEWStep 2: (1) Determine the amount of Transport Services Department's variable costs charged to each plant:
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VIEWStep 4: (3) Determine if there is any spending variance on actual total cost or not:
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