1) Calculate the amount of variable cost charged to each plant.
the variable cost charged to northern plant = Northern plant tons * Variable cost per unit
= 117000*0.15
= 17550
Variable cost charged to southern plant = southern plant tons * variable cost per unit
= 66000*0.15
= 9900
2) Calculate the amount of fixed cost charged to each plant.
Fixed cost charged to Northern plant = Fixed cost *65%
= 268600*65%
= 174,590
Fixed cost charged to southern plant = Fixed cost *35%
= 268600*35%
=94,010
3) The $369,000 in total cost should not be charged to the plants. The total variable changes to both the plants are $27,450(17550+9900). And the total fixed charged to both the plants are $268600 (174590+94010). So, the total charges to both the plants are 296050 ($27450(variable charges)+268600(fixed charges)). The total actual cost incurred is $369,000. Hence, the remaining cost of $72950 (369000-296050) is considered as spending variance.
The overall spending variance of $72950 shows that the costs incurred in excess of the budgeted $0.15 per ton variable cost and budgeted $268,600 in fixed costs. The $72,950 uncharged cost is the responsibility of the "Transport Service Department" (maintenance department).
Hannibal Steel Company has a Transport Services Department that provides trucks to haul ore from the...
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 $237,000 per
year, consisting of $0.24 per ton variable cost and $187,000 fixed
cost. The level of fixed cost is determined by peak-period
requirements. During the peak period, the Northern Plant requires
58% of the Transport Services Department’s capacity and the
Southern Plant...
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 $204,700 per year, consisting of $0.19 per ton variable cost and $154,700 fixed cost. The level of fixed cost is determined by peak-period requirements. During the peak period, the Northern Plant requires 69% of the Transport Services Department's capacity and the Southern Plant...
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 $177,500 per year, consisting of $0.21 per ton variable cost and $127,500 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...
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 $219,400 per year, consisting of $0.18 per ton variable cost and $169,400 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...
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 $298,500 per year, consisting of $0.16 per ton variable cost and $248,500 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...
Tasman Products, Ltd., of Australia has a Maintenance Department that services the equipment in the company's Forming Department and Assembly Department. The cost of this servicing is charged to the operating departments on the basis of machine-hours. Cost and other data relating to the Maintenance Department and to the other two departments for the most recent year are presented below. Data for the Maintenance Department follow: Variable costs for lubricants Fixed costs for salaries and other Budget $ 294,000* $210,000...
Tasman Products, Ltd., of Australia has a Maintenance Department
that services the equipment in the company’s Forming Department and
Assembly Department. The cost of this servicing is charged to the
operating departments on the basis of machine-hours. Cost and other
data relating to the Maintenance Department and to the other two
departments for the most recent year are presented below.
Data for the Maintenance Department follow:
1. How much Maintenance Department cost should be charged to the
Forming Department and...
Problem 11B-5 Service Department Charges (LO11-6) Tasman Products, Ltd., of Australia has a Maintenance Department that services the equipment in the company's Forming Departmer and Assembly Department. The cost of this servicing is charged to the operating departments on the basis of machine-hours. Cost ar other data relating to the Maintenance Department and to the other two departments for the most recent year are presented below. Data for the Maintenance Department follow Variable costs for lubricants Fixed costs for salaries...
Problem 11B-5 Service Department Charges [LO11-6] Tasman Products, Ltd., of Australia has a Maintenance Department that services the equipment in the company's Forming Department and Assembly Department. The cost of this servicing is charged to the operating departments on the basis of machine-hours. Cost and other data relating to the Maintenance Department and to the other two departments for the most recent year are presented below. Data for the Maintenance Department follow Variable costs for lubricants Fixed costs for salaries...
Tasman Products, Ltd., of Australla has a Maintenance Department that services the equipment in the company's Forming Department and Assembly Department. The cost of this servicing is charged to the operating departments on the basis of machine-hours. Cost and other data relating to the Maintenance Department and to the other two departments for the most recent year are presented below. Data for the Maintenance Department follow Budget $325,500 $417,150 $210,000 Actual Variable costs for lubricants Fixed costs for salaries and...