Question
Manning Products, inc, operates an electric power plant that provides all electrical power for the company's machining and fabrication departments. Information on kwh of power
Manning Products, inc, operates an electric power plant that provides all electrical power for the company's machining and fabrication departments. Information on kwh of power usage in these departments for May follows:
Machinig | Fabrication | Total | |
Budgeted kwh | 180,000 | 60,000 | 240,000 |
Actual kwh used | 200,000 | 50,000 | 250,000 |
The costs of electric power plant are all fixed. The level of budgeted fixed costs is determined by the peak-period requirements. Budgeted fixed costs for May totaled $120,000. Actual fixed costs for the month totaled $130,000. The Machining Department requires 70% of the peak-period capacity and the Fabrication Departments requires 30%.
For performance evaluation purposes, how much of the electric power plant's fixed costs should be charged to the Fabrication Department at the end of the month?
a) $44,000
b) $36,000
c) $91,000
d) $97,500
Please show all steps.
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