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 $193,700 per year, consistingof $0.16 per ton variable cost and $143,700 fixed cost. The level of fixed cost is determined by peak-period requirements. During thepeak period, the Northern Plant requires 65% of the Transport Services Department's capacity and the Southern Plant requires 35%.During the year, the Transport Services Department actually hauled 120,000 tons of ore to the Northern Plant and 52,800 tons to theSouthern Plant. The Transport Services Department incurred $361,000 in cost during the year, of which $53,700 was variable and$307,300 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 $361,000 should be treated as a spending varianceand not charged to the plants?

To solve this problem, we need to allocate the variable and fixed costs of the Transport Services…

Answered: Hannibal Steel Company's Transport…

Managerial Accounting

15th Edition

ISBN:9781337912020

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

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

Chapter8: Budgeting

Section: Chapter Questions

Problem 4CMA: Krouse Company produces two products, forged putter heads and laminated putter heads, which are sold...

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Foy Company has a welding activity and wants to develop a flexible budget formula for the activity. The following resources are used by the activity: Four welding units, with a lease cost of 12,000 per year per unit Six welding employees each paid a salary of 50,000 per year (A total of 9,000 welding hours are supplied by the six workers.) Welding supplies: 300 per job Welding hours: Three hours used per job During the year, the activity operated at 90 percent of capacity and incurred the actual activity and resource costs, shown on page 676. Lease cost: 48,000 Salaries: 315,000 Parts and supplies: 805,000 Required: 1. Prepare a flexible budget formula for the welding activity using welding hours as the driver. 2. Prepare a performance report for the welding activity. 3. What if welders were hired through outsourcing and paid 30 per hour (the welding equipment is provided by Foy)? Repeat Requirement 1 for the outsourcing case.
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 $321,300 per year, consisting of $0.15 per ton variable cost and $271,300 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 requires 31%. During the year, the Transport Services Department actually hauled 124,000 tons of ore to the Northern Plant and 58,600 tons to the Southern Plant. The Transport Services Department incurred $361,000 in cost during the year, of which $54,000 was variable cost and $307,000 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…
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 $309,500 per year, consisting of $0.23 per ton variable cost and $259,500 fixed cost. The level of fixed cost is determined by peak-period requirements. During the peak period, the Northern Plant requires 67% of the Transport Services Department's capacity and the Southern Plant requires 33%. During the year, the Transport Services Department actually hauled 120,000 tons of ore to the Northern Plant and 68,400 tons to the Southern Plant. The Transport Services Department incurred $368,000 in cost during the year, of which $53,800 was variable cost and $314.200 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 $314,200 in fixed cost should be charged to each…
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 $167,300 per year, consisting of $0.19 per ton variable cost and $117,300 fixed cost. The level of fixed cost is determined by peak-period requirements. During the peak period, the Northern Plant requires 53% of the Transport Services Department’s capacity and the Southern Plant requires 47%. During the year, the Transport Services Department actually hauled 123,000 tons of ore to the Northern Plant and 55,900 tons to the Southern Plant. The Transport Services Department incurred $377,000 in cost during the year, of which $53,100 was variable cost and $323,900 was fixed cost. Required: How much of the Transport Services Department’s variable costs should be charged to each plant? How much of the Transport Services Department’s fixed costs should…
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 $283,800 per year, consisting of $0.17 per ton variable cost and $233,800 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 requires 42%. During the year, the Transport Services Department actually hauled 127,000 tons of ore to the Northern Plant and 61,200 tons to the Southern Plant. The Transport Services Department incurred $356,000 in cost during the year, of which $53,200 was variable and $302,800 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…
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 $237,500 per year, consisting of $0.22 per ton variable cost and $187,500 fixed cost. The level of fixed cost is determined by peak-period requirements. During the peak period, the Northern Plant requires 64% of the Transport Services Department's capacity and the Southern Plant requires 36% During the year, the Transport Services Department actually hauled 126,000 tons of ore to the Northern Plant and 67,900 tons to the Southern Plant. The Transport Services Department Incurred $363,000 In cost during the year, of which $54,000 was variable and $309,000 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…
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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…
Macalister Corporation is developing departmental overhead rates based on direct labor hours for its two production departments-Molding and Assembly. The Molding Department employs 20 people, and the Assembly Department employs 80 people. Each person in these two departments works 2,000 hours per year. The production-related overhead costs for the Molding Department arc budgeted at $190,000, and the Assembly Department costs are budgeted at $80,000. Two support departments-Engineering and General Factory-directly support the two production departments and have budgeted costs of $216,000 and $370,000, respectively. The production departments' overhead rates cannot be determined until the support departments' costs are properly allocated. The following schedule reflects the use of the Engineering Department's and General Factory Department's output by the various departments. Engineering General Factory Molding Assembly Engineering hours - 2,000 2,000…
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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Macalister Corporation is developing departmental overhead rates based on direct labor hours for its two production departments—Molding and Assembly. The Molding Department employs 20 people, and the Assembly Department employs 80 people. Each person in these two departments works 2,000 hours per year. The production-related overhead costs for the Molding Department are budgeted at $190,000, and the Assembly Department costs are budgeted at $80,000. Two support departments—Engineering and General Factory—directly support the two production departments and have budgeted costs of $216,000 and $370,000, respectively. The production departments' overhead rates cannot be determined until the support departments' costs are properly allocated. The following schedule reflects the use of the Engineering Department's and General Factory Department's output by the various departments. Engineering General Factory Molding Assembly Engineering hours — 2,000 2,000 8,000 Square feet…

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