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Exercise 11-4 (Algo) Service Department Charges [LO11-4] 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 $325.800 per year, consisting of $0.16 per ton variable cost and $275,800 foxed cost. The level of fixed cost is determined by peak-penod requirements. During the peak period, the Northern Plant requires 66% of the Transport Services Department's capacity and the Southern Plant requires 34% During the year, the Transport Services Department actually hauled 122.000 tons of ore to the Northern Plant and 67.400 tons to the Southern Plant The Transport Services Department incurred $366,000 in cost during the year, of which $53,900 was variable cost and $312.100 was fixed cost Required: 1, How much of the Transport Services Department's variable costs should be charged to each plant? 2. How much of the Transport Services Department's fixed costs should be charged to each plant? 3. How much, if any, of the Transport Services Department's actual total cost of $366,000 should be treated as a spending variance and not charged to the plants?

Exercise 11-4 (Algo) Service Department Charges [LO11-4] 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 $325.800 per year, consisting of $0.16 per ton variable cost and $275,800 foxed cost. The level of fixed cost is determined by peak-penod requirements. During the peak period, the Northern Plant requires 66% of the Transport Services Department's capacity and the Southern Plant requires 34% During the year, the Transport Services Department actually hauled 122.000 tons of ore to the Northern Plant and 67.400 tons to the Southern Plant The Transport Services Department incurred $366,000 in cost during the year, of which $53,900 was variable cost and $312.100 was fixed cost Required: 1, How much of the Transport Services Department's variable costs should be charged to each plant? 2. How much of the Transport Services Department's fixed costs should be charged to each plant? 3. How much, if any, of the Transport Services Department's actual total cost of $366,000 should be treated as a spending variance and not charged to the plants?

Managerial Accounting
Managerial Accounting
15th Edition
ISBN:9781337912020
Author:Carl Warren, Ph.d. Cma William B. Tayler
Publisher:Carl Warren, Ph.d. Cma William B. Tayler
Chapter11: Differential Analysis And Product Pricing
Section: Chapter Questions
Problem 14E: Accepting business at a special price Box Elder Power Company expects to operate at 85% of...
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Exercise 11-4 (Algo) Service Department Charges [LO11-4] 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 $325.800 per year. consisting of $0.16 per ton variable cost and $275,800 fixed cost. The level of fixed cost is determined by peak-penod requirements. During the peak period, the Northern Plant requires 66% of the Transport Services Department's capacity and the Southern Plant requires 34% During the year, the Transport Services Department actually hauled 122.000 tons of ore to the Northern Plant and 67,400 tons to the Southern Plant The Transport Services Department incurred $366,000 in cost during the year, of which $53,900 was variable cost and $312.100 was fixed cost Required: 1. How much of the Transport Services Department's variable costs should be charged to each plant? 2. How much of the Transport Services Department's fixed costs should be charged to each plant? 3. How much, if any, of the Transport Services Department's actual total cost of $366,000 should be treated as a spending variance and not charged to the plants?
Transcribed Image Text:Exercise 11-4 (Algo) Service Department Charges [LO11-4] 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 $325.800 per year. consisting of $0.16 per ton variable cost and $275,800 fixed cost. The level of fixed cost is determined by peak-penod requirements. During the peak period, the Northern Plant requires 66% of the Transport Services Department's capacity and the Southern Plant requires 34% During the year, the Transport Services Department actually hauled 122.000 tons of ore to the Northern Plant and 67,400 tons to the Southern Plant The Transport Services Department incurred $366,000 in cost during the year, of which $53,900 was variable cost and $312.100 was fixed cost Required: 1. How much of the Transport Services Department's variable costs should be charged to each plant? 2. How much of the Transport Services Department's fixed costs should be charged to each plant? 3. How much, if any, of the Transport Services Department's actual total cost of $366,000 should be treated as a spending variance and not charged to the plants?
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