Answer Happy

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 $282,600 per
year, consisting of $0.2 per ton variable cost and $232,600 fixed
cost. The level of fixed cost is determined by peak-period
requirements. During the peak period, the Northern Plant requires
60% of the Transport Services Department’s capacity and the
Southern Plant requires 40%.
During the year, the Transport Services Department actually
hauled 127,000 tons of ore to the Northern Plant and 59,400 tons to
the Southern Plant. The Transport Services Department incurred
$368,000 in cost during the year, of which $54,000 was variable
cost and $314,000 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 $314,000 in fixed cost should be charged to
each plant?
3. Should any of the Transport Services Department’s actual
total cost of $368,000 be treated as a spending variance and not
charged to the plants?