Hannibal Steel Company has a Transport Services Department that provides trucks to haul ore from...
Question:
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 $214,500 per year, consisting of $0.18 per ton variable cost and $164,500 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 the following amounts of ore for the two plants: Northern Plant, 126,000 tons; Southern Plant, 52,500 tons. The Transport Services Department incurred $371,000 in cost during the year, of which $52,300 was variable cost and $318,700 was fixed cost.
1.Determine how much of the $52,300 in variable cost should be charged to each plant.
2.Determine how much of the $318,700 in fixed cost should be charged to each plant.
3.Should any of the $371,000 in the Transport Services Department cost not be charged to the plants?
Unallocated cost:
This is the cost which has not been allocated to any product or department. and has not been included in the calculation of cost of goods sold.
this cost is recognized as expense in the period in which it is incurred.
Answer and Explanation: 1
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View this answer1) Determine how much of the $52,300 in variable cost should be charged to each plant.:
| S.no. | Particulars | Northern plant | Southern plant |
| (a) | budgeted... |
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