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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
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 $245,600 per year, consisting of $0.24 per ton varlable cost and $195,600 fixed cost. The level of fixed cost is determined by peak-perlod 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 112,000 tons of ore to the Northern Plant and 58,500 tons to the Southern Plant. The Transport Services Department incurred $351,000 in cost during the year, of which $53,500 was varlable cost and $297,500 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 $297,500 in fixed cost should be charged to each plant? 3. How much, if any, of the Transport Services Department's actual total cost of $351,000 should be treated as a spending varlance and not charged to the plants? Complete this question by entering your answers in the tabs below
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