Hannibal Steel Company (Ch 11)

k K Question 7 (of 8) value: 3.75 points 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 $322,700 per year, consisting of $0.22 per ton variable cost and $272,700 fixed cost. The level of fixed cost is determined by peak-period requirements. During the peak period, the Northern Plant requires 52% of the Transport Services Department's capacity and the Southern Plant requires 48%. During the year, the Transport Services Department actually hauled the following amounts of ore for the two plants: Northern Plant, 118,000 tons; Southern Plant, 61,900 tons. The Transport Services Department incurred $364,000 in cost during the year, of which $52,500 was variable cost and $311,500 was fixed cost. Required: 1. Determine how much of the $52,500 in variable cost should be charged to each plant. Variable cost charged to Northern Plant Variable cost charged to Southern Plant