Delta Railroad has two operating divisionsFreight and Passenger. The Maintenance Department serves both divisions. Variable Maintenance Department costs are budgeted at $12 per thousand miles. The fixed Maintenance Department costs are budgeted at $800,000 per year. The level of the fixed Maintenance Department costs are determined by the peak-period requirements. Data for last year follow:

During last year, the Maintenance Department actually incurred $650,000 in variable costs and $815,000 in fixed costs. For performance evaluation purposes, how much of the Maintenance Department's actual variable costs should be retained in that department as a spending variance?

		$74,000
		$0
		$50,000
		$60,000

Thousands of Miles		Peak-Period
Division	Budgeted	Actual	Requirements
Freight	28,800	29,500	55%
Passenger	19,200	20,500	45%