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Exercise 1 1 - 4 ( Algo ) Service Department Charges [ LO 1 1 - 4 ] Hannibal Steel Company has a Transport Services

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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 $340,000 per year,
consisting of $0.19 per ton variable cost and $290,000 fixed cost. The level of fixed cost is determined by peak-period requirements.
During the peak period, the Northern Plant requires 63% of the Transport Services Department's capacity and the Southern Plant
requires 37%.
During the year, the Transport Services Department actually hauled 128,000 tons of ore to the Northern Plant and 59,900 tons to the
Southern Plant. The Transport Services Department incurred $358,000 in cost during the year, of which $53,000 was variable cost and
$305,000 was fixed cost.
Required:
How much of the Transport Services Department's variable costs should be charged to each plant?
How much of the Transport Services Department's fixed costs should be charged to each plant?
How much, if any, of the Transport Services Department's actual total cost of $358,000 should be treated as a spending variance
and not charged to the plants?
Complete this question by entering your answers in the tabs below.
How much of the Transport Services Department's variable costs should be charged to each plant?
Variable cost charged to Northern Plant
Variable cost charged to Southern Plant
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