Hannibal Steel Companys Transport Services Department provides trucks to haul ore from the companys mine to its two steel millsthe Northern Plant and the Southern Plant. Budgeted costs for the Transport Services Department total $ per year, consisting of $ per ton variable cost and $ fixed cost. The level of fixed cost is determined by peakperiod requirements. During the peak period, the Northern Plant requires of the Transport Services Departments capacity and the Southern Plant requires
During the year, the Transport Services Department actually hauled tons of ore to the Northern Plant and tons to the Southern Plant. The Transport Services Department incurred $ in cost during the year, of which $ was variable and $ was fixed.
Required:
How much of the Transport Services Departments variable costs should be charged to each plant?
How much of the Transport Services Departments fixed costs should be charged to each plant?
How much, if any, of the Transport Services Departments actual total cost of $ should be treated as a spending variance and not charged to the plants?
