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 $154,500 per year, consistin of $0.2 per ton variable cost and $104,500 fixed cost. The level of fixed cost is determined by peak-period requirements. During the peak period, the Northern Plant requires 59% of the Transport Services Department's capacity and the Southern Plant requires 41% During the year, the Transport Services Department actually hauled 129,000 tons of ore to the Northern Plant and 64,500 tons to th Southern Plant. The Transport Services Department incurred $364,000 in cost during the year, of which $53,300 was variable and $310,700 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 $154,500 per year, consistin of $0.2 per ton variable cost and $104,500 fixed cost. The level of fixed cost is determined by peak-period requirements. During the peak period, the Northern Plant requires 59% of the Transport Services Department's capacity and the Southern Plant requires 41% During the year, the Transport Services Department actually hauled 129,000 tons of ore to the Northern Plant and 64,500 tons to th Southern Plant. The Transport Services Department incurred $364,000 in cost during the year, of which $53,300 was variable and $310,700 was fixed.

Managerial Accounting

15th Edition

ISBN:9781337912020

Author:Carl Warren, Ph.d. Cma William B. Tayler

Publisher:Carl Warren, Ph.d. Cma William B. Tayler

Chapter11: Differential Analysis And Product Pricing

Section: Chapter Questions

Problem 14E: Accepting business at a special price Box Elder Power Company expects to operate at 85% of...

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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…
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es 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 $320,500 per year, consisting of $0.25 per ton variable cost and $270,500 fixed cost. The level of fixed cost is determined by peak-period requirements. During the peak period, the Northern Plant requires 68% of the Transport Services Department's capacity and the Southern Plant requires 32%. During the year, the Transport Services Department actually hauled 112,000 tons of ore to the Northern Plant and 62,700 tons to the Southern Plant. The Transport Services Department incurred $366,000 in cost during the year, of which $53,600 was variable cost and $312,400 was fixed cost. 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…
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