Exercise 11B-1 Service Department Charges [LO11-6]

Hannibal Steel Company has a Transport Services Department that 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 $238,200 per year, consisting of $0.2 per ton variable cost and $188,200 fixed cost. The level of fixed cost is determined by peak-period requirements. During the peak period, the Northern Plant requires 55% of the Transport Services Departments capacity and the Southern Plant requires 45%.

During the year, the Transport Services Department actually hauled the following amounts of ore for the two plants: Northern Plant, 112,000 tons; Southern Plant, 67,500 tons. The Transport Services Department incurred $367,000 in cost during the year, of which $53,200 was variable cost and $313,800 was fixed cost.

Required:
1.	Determine how much of the $53,200 in variable cost should be charged to each plant.

2.	Determine how much of the $313,800 in fixed cost should be charged to each plant.

3.	How much amount out of $367,000 in the Transport Services Department cost should not be charged to the plants?

Please show me the work for the answers.

Thank you