(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%. How much (if any)of the electric power plant's actual fixed costs should not be allocated to the other departments?
A)$0
B)$10, 000
C)$5, 000
D)$20, 000

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%. How much (if any)of the electric power plant's actual fixed costs should not be allocated to the other departments?
A)$0 
B)$10, 000 
C)$5, 000 
D)$20, 000

Quizplus · Accepted Answer

Spending variance = Actual cost incurred - Charges to the operating departments
= $130, 000 - $120, 000 = $10, 000