ezto mheducation.com/m.tpx2-0.7016088003932712 1523911514258 Hannibal Steel Comp

Question

ezto mheducation.com/m.tpx2-0.7016088003932712 1523911514258 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 $196,900 per year, consisting of $0 23 per ton variable cost and $146,900 fixed cost. The level of fixed cost is determined by peak-period 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 the following amounts of ore for the two plants: Northern Plant, 124,000 tons Southern Plant, 67,100 tons. The Transport Services Department incurred $357,000 in cost during the year, of which $53,600 was variable cost and $303,400 was fixed cost Guirerine how much of the $53,600n vaiable cost shouid be charged to each pliant 1. Determine how much of the $53,600 in variable cost should be charged to each plant Variable cost charged to Northern Plant Variable cost charged to Southern Plant 2. Determine how much of the $303.400 in fixed cost should be charged to each plant Fixed cost charged to Northern Plant Fixed cost charged to Southern Plant 3. Should any of the $357,000 in the Transport Services Department cost not be charged to the plants? Unallocated cost

Explanation / Answer

1 Budgeted Costs 196900 Variable Cost 0.23 Fixed Cost 146900 Northern Plant 63% Southern Plant 37% Northern Plant 124000 Southern Plant 67100 TSD 357000 Variable Cost 53600 Fixed cost 303400 Variable cost charged to Northern Plant .23*124000 28520 Variable cot charged to Southern Plant .23*67100 15433 2 Fixed Cost charged to Northern Plant 63%*146900 92547 Fixed Cost charged to Southern Plant 146900*37% 54353 3 Total Variable Cost 43953 (28520+15433)

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