Hannibal Steel Company has a Transport Services Department that provides trucks to haul ore from...
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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 $223,100 per year, consisting of $0.23 per ton variable cost and $307,900 fixed cost. The level of fixed cost is determined by peak-period requirements. During the peak period, the Northern Plant requires 69% of the Transport Services Department's capacity and the Southern Plant requires 31%. During the year, the Transport Services Department actually hauled the following amounts of ore for the two plants: Northern Plant, 14,000 tons; Southern Plant, 61,800 tons. The Transport Services Department incurred $360,000 in cost during the year, of which $52,100 was variable cost and $173,100 was fixed cost. Required 1. How much of the $52,100 in variable cost should be charged to each plant. 2. How much of the $173,100 in fixed cost should be charged to each plant. 3. How much amount out of $360,000 in the Transport Services Department cost should be treated as a spending variance and not charged to the plants? Complete this question by entering your answers in the tabs below. Required 1Required 2 Required 3 How much of the $52,100 in variable cost should be charged to each plant Variable cost charged to Northern Plant Variable cost charged to Southern Plant
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