(Appendix 12B)Manning Products, Inc. , operates an electric power plant that provides all electrical power for the company's Machining and Fabrication Departments.Information on kwh of power usage in these departments for May follows: The costs of the electric power plant are all fixed.The level of budgeted fixed costs is determined by the peak-period requirements.Budgeted fixed costs for May totaled $120, 000.Actual fixed costs for the month totaled $130, 000.The Machining Department requires 70% of the peak-period capacity and the Fabrication Department requires 30%. For performance evaluation purposes, how much of the electric power plant's fixed costs should be charged to the Fabrication Department at the end of the month?
A)$36, 000
B)$91, 000
C)$44, 000
D)$97, 500

Question

(Appendix 12B)Manning Products, Inc. , operates an electric power plant that provides all electrical power for the company's Machining and Fabrication Departments.Information on kwh of power usage in these departments for May follows:  The costs of the electric power plant are all fixed.The level of budgeted fixed costs is determined by the peak-period requirements.Budgeted fixed costs for May totaled $120, 000.Actual fixed costs for the month totaled $130, 000.The Machining Department requires 70% of the peak-period capacity and the Fabrication Department requires 30%. For performance evaluation purposes, how much of the electric power plant's fixed costs should be charged to the Fabrication Department at the end of the month?
A)$36, 000 
B)$91, 000 
C)$44, 000 
D)$97, 500

Quizplus · Accepted Answer

Fixed charges = Percentage of peak-period capacity required × Budgeted fixed cost
= 30% × $120, 000 = $36, 000