Answered step by step
Verified Expert Solution
Question
1 Approved Answer
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 $191, 200 per year, consisting of $0.2 per ton variable cost and $141, 200 fixed cost. The level of fixed cost Is determined by peak-period requirements. During the peak period, the Northern Plant requires 51% of the Transport Services Department's capacity and the Southern Plant requires 49%. During the year, the Transport Services Department actually hauled the following amounts of ore for the two plants: Northern Plant, 121,000 tons; Southern Plant, 68, 100 tons. The Transport Services Department incurred $368,000 in cost during the year, of which $53, 400 was variable cost and $314, 600 was fixed cost. Required: Determine how much of the $53, 400 in variable cost should be charged to each plant. Determine how much of the $314, 600 in fixed cost should be charged to each plant. Should any of the $368,000 in the Transport Services Department cost not be charged to the plants
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started