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Hannibal Steel Company's Transport Services Department 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 $322,200 per year, consisting of $0.23 per ton variable cost and $272,200 fixed cost. The level of fixed cost is determined by peak-period requirements. During the peak period, the Northern Plant requires 56% of the Transport Services Department's capacity and the Southern Plant requires 44%. During the year, the Transport Services Department actually hauled 121,000 tons of ore to the Northern Plant and 60,900 tons to the Southern Plant. The Transport Services Department incurred $368,000 in cost during the year, of which $52,300 was variable and $315,700 was fixed.

Hannibal Steel Company's Transport Services Department 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 $322,200 per year, consisting of $0.23 per ton variable cost and $272,200 fixed cost. The level of fixed cost is determined by peak-period requirements. During the peak period, the Northern Plant requires 56% of the Transport Services Department's capacity and the Southern Plant requires 44%. During the year, the Transport Services Department actually hauled 121,000 tons of ore to the Northern Plant and 60,900 tons to the Southern Plant. The Transport Services Department incurred $368,000 in cost during the year, of which $52,300 was variable and $315,700 was fixed.

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Hannibal Steel Company's Transport Services Department 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 $322,200 per year, consisting of $0.23 per ton variable cost and $272,200 fixed cost. The level of fixed cost is determined by peak-period requirements. During the peak period, the Northern Plant requires 56% of the Transport Services Department's capacity and the Southern Plant requires 44%. During the year, the Transport Services Department actually hauled 121,000 tons of ore to the Northern Plant and 60,900 tons to the Southern Plant. The Transport Services Department incurred $368,000 in cost during the year, of which $52,300 was variable and $315,700 was fixed. Required: 1. How much of the Transport Services Department's variable costs should be charged to each plant? 2. How much of the Transport Services Department's fixed costs should be charged to each plant? 3. How much, if any, of the Transport Services Department's actual total cost of $368,000 should be treated as a spending variance and not charged to the plants? Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 How much of the Transport Services Department's variable costs should be charged to each plant? Variable cost charged to Northern Plant Variable cost charged to Southern Plant
Transcribed Image Text:Hannibal Steel Company's Transport Services Department 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 $322,200 per year, consisting of $0.23 per ton variable cost and $272,200 fixed cost. The level of fixed cost is determined by peak-period requirements. During the peak period, the Northern Plant requires 56% of the Transport Services Department's capacity and the Southern Plant requires 44%. During the year, the Transport Services Department actually hauled 121,000 tons of ore to the Northern Plant and 60,900 tons to the Southern Plant. The Transport Services Department incurred $368,000 in cost during the year, of which $52,300 was variable and $315,700 was fixed. Required: 1. How much of the Transport Services Department's variable costs should be charged to each plant? 2. How much of the Transport Services Department's fixed costs should be charged to each plant? 3. How much, if any, of the Transport Services Department's actual total cost of $368,000 should be treated as a spending variance and not charged to the plants? Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 How much of the Transport Services Department's variable costs should be charged to each plant? Variable cost charged to Northern Plant Variable cost charged to Southern Plant
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