Transfer prices means the price charged on the product or service provided by on department of the company to another department of the company. Divisions are evaluated on the profit basis, or residual income price must be fixed for the transfer. Prices charged in these situations are referred as transfer prices. To compute: The variable cost of Transport Service Department that is charged to each plant.

Question

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Answer 1

Question

Chapter 11B, Problem 11B.1E

1.

To determine

Introduction: Transfer prices means the price charged on the product or service provided by on department of the company to another department of the company. Divisions are evaluated on the profit basis, or residual income price must be fixed for the transfer. Prices charged in these situations are referred as transfer prices.

To compute: The variable cost of Transport Service Department that is charged to each plant.

1.

Expert Solution

Answer to Problem 11B.1E

The variable cost of Transport Service Department that is charged to northern plant $210,000 and southern plant is $32,500.

Explanation of Solution

Variable costs charged to Northern plantVariable costs charged to northern plant= Northern plant tons× Varible cost per unitVariable costs charged to northern plant= 130,000× $0.25Variable costs charged to northern plant= $32,500

Variable costs charged to Southern plant

Variable costs charged to Southern plant= Southern plant tons× Varible cost per unitVariable costs charged to Southern plant= $50,000× $0.25Variable costs charged to Southern plant= $12,500

2.

To determine

Introduction: Transfer prices means the price charged on the product or service provided by on department of the company to another department of the company. Divisions are evaluated on the profit basis, or residual income price must be fixed for the transfer. Prices charged in these situations are referred as transfer prices.

To compute: The fixed cost of Transport Service Department that is charged to each plant.

2.

Expert Solution

Answer to Problem 11B.1E

The fixed cost of Transport Service Department that is charged to northern plant $210,000 and southern plant is $90,000.

Explanation of Solution

Fixed cost charged to Northern plant

Fixed cost charged to Northern plant= Fixed cost ×70%Fixed cost charged to Northern plant= $300,000× 70%Fixed cost charged to Northern plant=$210,000

Fixed cost charged to Southern plant

Fixed cost charged to Southern plant= Fixed cost ×30%Fixed cost charged to Southern plant= $300,000× 30%Fixed cost charged to Southern plant=$90,000

3.

To determine

Introduction: Transfer prices means the price charged on the product or service provided by on department of the company to another department of the company. Divisions are evaluated on the profit basis, or residual income price must be fixed for the transfer. Prices charged in these situations are referred as transfer prices.

To compute: The actual costs of $364,000 that can be treated as the Spending variances and are not charged to the plants.

3.

Expert Solution

Answer to Problem 11B.1E

The overall spending variance of $19000 shows that the costs incurred in excess of the budget $0.25 per ton variable cost and budget $300,000 in fixed cost $19000 uncharged cost is the responsibility of the transport service department.

Explanation of Solution

Total variable costs charges by both the plants are $45,000 ($32,500 + $12,500) and fixed cost to both the plants are $300,000 ($210,000 + $90,000).

Total charges to both the plants are $345,000

($45,000 (Variable charge )+$300,000(fixed charge ))

The total actual cost incurred is $364,000

The remaining cost $19000 ( $64,000−$345,000 )

The overall spending variance of $19000 shows that the costs incurred in excess of the budget $0.25 per ton variable cost and budget $300,000 in fixed cost $19000 uncharged cost is the responsibility of the transport service department.

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Students have asked these similar questions

Service Department Charges 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 $350,000 per year, consisting of $0.25 per ton variable cost and $300,000 fixed cost. The level of fixed cost is determined by peak-period requirements. During the peak period, the Northern Plant requires 70% of the Transport Services Department’s capacity and the Southern Plant requires 30%. During the year, the Transport Services Department actually hauled the following amounts of ore for the two plants: Northern Plant, 130,000 tons; Southern Plant, 50,000 tons. The Transport Services Department incurred $364,000 in cost during the year, of which $54,000 was variable cost and $310,000 was fixed cost. Required: 1. How much of the $54,000 in variable cost should be charged to each plant. 2. How much of the $310,000 in…

Subject : Accounting

V

Answer 2

Question

Chapter 11B, Problem 11B.1E

1.

To determine

Introduction: Transfer prices means the price charged on the product or service provided by on department of the company to another department of the company. Divisions are evaluated on the profit basis, or residual income price must be fixed for the transfer. Prices charged in these situations are referred as transfer prices.

To compute: The variable cost of Transport Service Department that is charged to each plant.

1.

Expert Solution

Answer to Problem 11B.1E

The variable cost of Transport Service Department that is charged to northern plant $210,000 and southern plant is $32,500.

Explanation of Solution

Variable costs charged to Northern plantVariable costs charged to northern plant= Northern plant tons× Varible cost per unitVariable costs charged to northern plant= 130,000× $0.25Variable costs charged to northern plant= $32,500

Variable costs charged to Southern plant

Variable costs charged to Southern plant= Southern plant tons× Varible cost per unitVariable costs charged to Southern plant= $50,000× $0.25Variable costs charged to Southern plant= $12,500

2.

To determine

Introduction: Transfer prices means the price charged on the product or service provided by on department of the company to another department of the company. Divisions are evaluated on the profit basis, or residual income price must be fixed for the transfer. Prices charged in these situations are referred as transfer prices.

To compute: The fixed cost of Transport Service Department that is charged to each plant.

2.

Expert Solution

Answer to Problem 11B.1E

The fixed cost of Transport Service Department that is charged to northern plant $210,000 and southern plant is $90,000.

Explanation of Solution

Fixed cost charged to Northern plant

Fixed cost charged to Northern plant= Fixed cost ×70%Fixed cost charged to Northern plant= $300,000× 70%Fixed cost charged to Northern plant=$210,000

Fixed cost charged to Southern plant

Fixed cost charged to Southern plant= Fixed cost ×30%Fixed cost charged to Southern plant= $300,000× 30%Fixed cost charged to Southern plant=$90,000

3.

To determine

Introduction: Transfer prices means the price charged on the product or service provided by on department of the company to another department of the company. Divisions are evaluated on the profit basis, or residual income price must be fixed for the transfer. Prices charged in these situations are referred as transfer prices.

To compute: The actual costs of $364,000 that can be treated as the Spending variances and are not charged to the plants.

3.

Expert Solution

Answer to Problem 11B.1E

The overall spending variance of $19000 shows that the costs incurred in excess of the budget $0.25 per ton variable cost and budget $300,000 in fixed cost $19000 uncharged cost is the responsibility of the transport service department.

Explanation of Solution

Total variable costs charges by both the plants are $45,000 ($32,500 + $12,500) and fixed cost to both the plants are $300,000 ($210,000 + $90,000).

Total charges to both the plants are $345,000

($45,000 (Variable charge )+$300,000(fixed charge ))

The total actual cost incurred is $364,000

The remaining cost $19000 ( $64,000−$345,000 )

The overall spending variance of $19000 shows that the costs incurred in excess of the budget $0.25 per ton variable cost and budget $300,000 in fixed cost $19000 uncharged cost is the responsibility of the transport service department.

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Answer 3

Question

Chapter 11B, Problem 11B.1E

1.

To determine

Introduction: Transfer prices means the price charged on the product or service provided by on department of the company to another department of the company. Divisions are evaluated on the profit basis, or residual income price must be fixed for the transfer. Prices charged in these situations are referred as transfer prices.

To compute: The variable cost of Transport Service Department that is charged to each plant.

1.

Expert Solution

Answer to Problem 11B.1E

The variable cost of Transport Service Department that is charged to northern plant $210,000 and southern plant is $32,500.

Explanation of Solution

Variable costs charged to Northern plantVariable costs charged to northern plant= Northern plant tons× Varible cost per unitVariable costs charged to northern plant= 130,000× $0.25Variable costs charged to northern plant= $32,500

Variable costs charged to Southern plant

Variable costs charged to Southern plant= Southern plant tons× Varible cost per unitVariable costs charged to Southern plant= $50,000× $0.25Variable costs charged to Southern plant= $12,500

2.

To determine

Introduction: Transfer prices means the price charged on the product or service provided by on department of the company to another department of the company. Divisions are evaluated on the profit basis, or residual income price must be fixed for the transfer. Prices charged in these situations are referred as transfer prices.

To compute: The fixed cost of Transport Service Department that is charged to each plant.

2.

Expert Solution

Answer to Problem 11B.1E

The fixed cost of Transport Service Department that is charged to northern plant $210,000 and southern plant is $90,000.

Explanation of Solution

Fixed cost charged to Northern plant

Fixed cost charged to Northern plant= Fixed cost ×70%Fixed cost charged to Northern plant= $300,000× 70%Fixed cost charged to Northern plant=$210,000

Fixed cost charged to Southern plant

Fixed cost charged to Southern plant= Fixed cost ×30%Fixed cost charged to Southern plant= $300,000× 30%Fixed cost charged to Southern plant=$90,000

3.

To determine

Introduction: Transfer prices means the price charged on the product or service provided by on department of the company to another department of the company. Divisions are evaluated on the profit basis, or residual income price must be fixed for the transfer. Prices charged in these situations are referred as transfer prices.

To compute: The actual costs of $364,000 that can be treated as the Spending variances and are not charged to the plants.

3.

Expert Solution

Answer to Problem 11B.1E

The overall spending variance of $19000 shows that the costs incurred in excess of the budget $0.25 per ton variable cost and budget $300,000 in fixed cost $19000 uncharged cost is the responsibility of the transport service department.

Explanation of Solution

Total variable costs charges by both the plants are $45,000 ($32,500 + $12,500) and fixed cost to both the plants are $300,000 ($210,000 + $90,000).

Total charges to both the plants are $345,000

($45,000 (Variable charge )+$300,000(fixed charge ))

The total actual cost incurred is $364,000

The remaining cost $19000 ( $64,000−$345,000 )

The overall spending variance of $19000 shows that the costs incurred in excess of the budget $0.25 per ton variable cost and budget $300,000 in fixed cost $19000 uncharged cost is the responsibility of the transport service department.

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Answer 4

Question

Chapter 11B, Problem 11B.1E

1.

To determine

Introduction: Transfer prices means the price charged on the product or service provided by on department of the company to another department of the company. Divisions are evaluated on the profit basis, or residual income price must be fixed for the transfer. Prices charged in these situations are referred as transfer prices.

To compute: The variable cost of Transport Service Department that is charged to each plant.

1.

Expert Solution

Answer to Problem 11B.1E

The variable cost of Transport Service Department that is charged to northern plant $210,000 and southern plant is $32,500.

Explanation of Solution

Variable costs charged to Northern plantVariable costs charged to northern plant= Northern plant tons× Varible cost per unitVariable costs charged to northern plant= 130,000× $0.25Variable costs charged to northern plant= $32,500

Variable costs charged to Southern plant

Variable costs charged to Southern plant= Southern plant tons× Varible cost per unitVariable costs charged to Southern plant= $50,000× $0.25Variable costs charged to Southern plant= $12,500

2.

To determine

Introduction: Transfer prices means the price charged on the product or service provided by on department of the company to another department of the company. Divisions are evaluated on the profit basis, or residual income price must be fixed for the transfer. Prices charged in these situations are referred as transfer prices.

To compute: The fixed cost of Transport Service Department that is charged to each plant.

2.

Expert Solution

Answer to Problem 11B.1E

The fixed cost of Transport Service Department that is charged to northern plant $210,000 and southern plant is $90,000.

Explanation of Solution

Fixed cost charged to Northern plant

Fixed cost charged to Northern plant= Fixed cost ×70%Fixed cost charged to Northern plant= $300,000× 70%Fixed cost charged to Northern plant=$210,000

Fixed cost charged to Southern plant

Fixed cost charged to Southern plant= Fixed cost ×30%Fixed cost charged to Southern plant= $300,000× 30%Fixed cost charged to Southern plant=$90,000

3.

To determine

Introduction: Transfer prices means the price charged on the product or service provided by on department of the company to another department of the company. Divisions are evaluated on the profit basis, or residual income price must be fixed for the transfer. Prices charged in these situations are referred as transfer prices.

To compute: The actual costs of $364,000 that can be treated as the Spending variances and are not charged to the plants.

3.

Expert Solution

Answer to Problem 11B.1E

The overall spending variance of $19000 shows that the costs incurred in excess of the budget $0.25 per ton variable cost and budget $300,000 in fixed cost $19000 uncharged cost is the responsibility of the transport service department.

Explanation of Solution

Total variable costs charges by both the plants are $45,000 ($32,500 + $12,500) and fixed cost to both the plants are $300,000 ($210,000 + $90,000).

Total charges to both the plants are $345,000

($45,000 (Variable charge )+$300,000(fixed charge ))

The total actual cost incurred is $364,000

The remaining cost $19000 ( $64,000−$345,000 )

The overall spending variance of $19000 shows that the costs incurred in excess of the budget $0.25 per ton variable cost and budget $300,000 in fixed cost $19000 uncharged cost is the responsibility of the transport service department.

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Answer 5

Chapter 11B, Problem 11B.1E

1.

To determine

Introduction: Transfer prices means the price charged on the product or service provided by on department of the company to another department of the company. Divisions are evaluated on the profit basis, or residual income price must be fixed for the transfer. Prices charged in these situations are referred as transfer prices.

To compute: The variable cost of Transport Service Department that is charged to each plant.

1.

Expert Solution

Answer to Problem 11B.1E

The variable cost of Transport Service Department that is charged to northern plant $210,000 and southern plant is $32,500.

Explanation of Solution

Variable costs charged to Northern plantVariable costs charged to northern plant= Northern plant tons× Varible cost per unitVariable costs charged to northern plant= 130,000× $0.25Variable costs charged to northern plant= $32,500

Variable costs charged to Southern plant

Variable costs charged to Southern plant= Southern plant tons× Varible cost per unitVariable costs charged to Southern plant= $50,000× $0.25Variable costs charged to Southern plant= $12,500

2.

To determine

Introduction: Transfer prices means the price charged on the product or service provided by on department of the company to another department of the company. Divisions are evaluated on the profit basis, or residual income price must be fixed for the transfer. Prices charged in these situations are referred as transfer prices.

To compute: The fixed cost of Transport Service Department that is charged to each plant.

2.

Expert Solution

Answer to Problem 11B.1E

The fixed cost of Transport Service Department that is charged to northern plant $210,000 and southern plant is $90,000.

Explanation of Solution

Fixed cost charged to Northern plant

Fixed cost charged to Northern plant= Fixed cost ×70%Fixed cost charged to Northern plant= $300,000× 70%Fixed cost charged to Northern plant=$210,000

Fixed cost charged to Southern plant

Fixed cost charged to Southern plant= Fixed cost ×30%Fixed cost charged to Southern plant= $300,000× 30%Fixed cost charged to Southern plant=$90,000

3.

To determine

Introduction: Transfer prices means the price charged on the product or service provided by on department of the company to another department of the company. Divisions are evaluated on the profit basis, or residual income price must be fixed for the transfer. Prices charged in these situations are referred as transfer prices.

To compute: The actual costs of $364,000 that can be treated as the Spending variances and are not charged to the plants.

3.

Expert Solution

Answer to Problem 11B.1E

The overall spending variance of $19000 shows that the costs incurred in excess of the budget $0.25 per ton variable cost and budget $300,000 in fixed cost $19000 uncharged cost is the responsibility of the transport service department.

Explanation of Solution

Total variable costs charges by both the plants are $45,000 ($32,500 + $12,500) and fixed cost to both the plants are $300,000 ($210,000 + $90,000).

Total charges to both the plants are $345,000

($45,000 (Variable charge )+$300,000(fixed charge ))

The total actual cost incurred is $364,000

The remaining cost $19000 ( $64,000−$345,000 )

The overall spending variance of $19000 shows that the costs incurred in excess of the budget $0.25 per ton variable cost and budget $300,000 in fixed cost $19000 uncharged cost is the responsibility of the transport service department.

Answer 6

Chapter 11B, Problem 11B.1E

1.

To determine

Introduction: Transfer prices means the price charged on the product or service provided by on department of the company to another department of the company. Divisions are evaluated on the profit basis, or residual income price must be fixed for the transfer. Prices charged in these situations are referred as transfer prices.

To compute: The variable cost of Transport Service Department that is charged to each plant.

1.

Expert Solution

Answer to Problem 11B.1E

The variable cost of Transport Service Department that is charged to northern plant $210,000 and southern plant is $32,500.

Explanation of Solution

Variable costs charged to Northern plantVariable costs charged to northern plant= Northern plant tons× Varible cost per unitVariable costs charged to northern plant= 130,000× $0.25Variable costs charged to northern plant= $32,500

Variable costs charged to Southern plant

Variable costs charged to Southern plant= Southern plant tons× Varible cost per unitVariable costs charged to Southern plant= $50,000× $0.25Variable costs charged to Southern plant= $12,500

Answer 7

Chapter 11B, Problem 11B.1E

1.

To determine

Introduction: Transfer prices means the price charged on the product or service provided by on department of the company to another department of the company. Divisions are evaluated on the profit basis, or residual income price must be fixed for the transfer. Prices charged in these situations are referred as transfer prices.

To compute: The variable cost of Transport Service Department that is charged to each plant.

Answer 8

1.

Expert Solution

Answer to Problem 11B.1E

The variable cost of Transport Service Department that is charged to northern plant $210,000 and southern plant is $32,500.

Answer 9

1.

Expert Solution

Answer 10

1.

Expert Solution

Answer 11

Expert Solution

Answer 12

Explanation of Solution

Variable costs charged to Northern plantVariable costs charged to northern plant= Northern plant tons× Varible cost per unitVariable costs charged to northern plant= 130,000× $0.25Variable costs charged to northern plant= $32,500

Variable costs charged to Southern plant

Variable costs charged to Southern plant= Southern plant tons× Varible cost per unitVariable costs charged to Southern plant= $50,000× $0.25Variable costs charged to Southern plant= $12,500

Answer 13

2.

To determine

Introduction: Transfer prices means the price charged on the product or service provided by on department of the company to another department of the company. Divisions are evaluated on the profit basis, or residual income price must be fixed for the transfer. Prices charged in these situations are referred as transfer prices.

To compute: The fixed cost of Transport Service Department that is charged to each plant.

2.

Expert Solution

Answer to Problem 11B.1E

The fixed cost of Transport Service Department that is charged to northern plant $210,000 and southern plant is $90,000.

Explanation of Solution

Fixed cost charged to Northern plant

Fixed cost charged to Northern plant= Fixed cost ×70%Fixed cost charged to Northern plant= $300,000× 70%Fixed cost charged to Northern plant=$210,000

Fixed cost charged to Southern plant

Fixed cost charged to Southern plant= Fixed cost ×30%Fixed cost charged to Southern plant= $300,000× 30%Fixed cost charged to Southern plant=$90,000

Answer 14

2.

To determine

Introduction: Transfer prices means the price charged on the product or service provided by on department of the company to another department of the company. Divisions are evaluated on the profit basis, or residual income price must be fixed for the transfer. Prices charged in these situations are referred as transfer prices.

To compute: The fixed cost of Transport Service Department that is charged to each plant.

Answer 15

2.

Expert Solution

Answer to Problem 11B.1E

The fixed cost of Transport Service Department that is charged to northern plant $210,000 and southern plant is $90,000.

Answer 16

2.

Expert Solution

Answer 17

2.

Expert Solution

Answer 18

Expert Solution

Answer 19

Explanation of Solution

Fixed cost charged to Northern plant

Fixed cost charged to Northern plant= Fixed cost ×70%Fixed cost charged to Northern plant= $300,000× 70%Fixed cost charged to Northern plant=$210,000

Fixed cost charged to Southern plant

Fixed cost charged to Southern plant= Fixed cost ×30%Fixed cost charged to Southern plant= $300,000× 30%Fixed cost charged to Southern plant=$90,000

Answer 20

3.

To determine

Introduction: Transfer prices means the price charged on the product or service provided by on department of the company to another department of the company. Divisions are evaluated on the profit basis, or residual income price must be fixed for the transfer. Prices charged in these situations are referred as transfer prices.

To compute: The actual costs of $364,000 that can be treated as the Spending variances and are not charged to the plants.

3.

Expert Solution

Answer to Problem 11B.1E

The overall spending variance of $19000 shows that the costs incurred in excess of the budget $0.25 per ton variable cost and budget $300,000 in fixed cost $19000 uncharged cost is the responsibility of the transport service department.

Explanation of Solution

Total variable costs charges by both the plants are $45,000 ($32,500 + $12,500) and fixed cost to both the plants are $300,000 ($210,000 + $90,000).

Total charges to both the plants are $345,000

($45,000 (Variable charge )+$300,000(fixed charge ))

The total actual cost incurred is $364,000

The remaining cost $19000 ( $64,000−$345,000 )

The overall spending variance of $19000 shows that the costs incurred in excess of the budget $0.25 per ton variable cost and budget $300,000 in fixed cost $19000 uncharged cost is the responsibility of the transport service department.

Answer 21

3.

To determine

Introduction: Transfer prices means the price charged on the product or service provided by on department of the company to another department of the company. Divisions are evaluated on the profit basis, or residual income price must be fixed for the transfer. Prices charged in these situations are referred as transfer prices.

To compute: The actual costs of $364,000 that can be treated as the Spending variances and are not charged to the plants.

Answer 22

3.

Expert Solution

Answer to Problem 11B.1E

The overall spending variance of $19000 shows that the costs incurred in excess of the budget $0.25 per ton variable cost and budget $300,000 in fixed cost $19000 uncharged cost is the responsibility of the transport service department.

Answer 23

3.

Expert Solution

Answer 24

3.

Expert Solution

Answer 25

Expert Solution

Answer 26

Explanation of Solution

Total variable costs charges by both the plants are $45,000 ($32,500 + $12,500) and fixed cost to both the plants are $300,000 ($210,000 + $90,000).

Total charges to both the plants are $345,000

($45,000 (Variable charge )+$300,000(fixed charge ))

The total actual cost incurred is $364,000

The remaining cost $19000 ( $64,000−$345,000 )

The overall spending variance of $19000 shows that the costs incurred in excess of the budget $0.25 per ton variable cost and budget $300,000 in fixed cost $19000 uncharged cost is the responsibility of the transport service department.