The Hudson Block Company has a trucking department that delivers crushed stone from the company's quarry to its two cement block production facilities--the West Plant and the East Plant. Budgeted costs for the trucking department are $340,000 per year in fixed costs and $0.30 per ton variable cost. Last year, 70,000 tons of crushed stone were budgeted to be delivered to the West Plant and 100,000 tons of crushed stone to the East Plant. During the year, the trucking department actually delivered 75,000 tons of crushed stone to the West Plant and 90,000 tons to the East Plant. Its actual costs for the year were $65,000 variable and $350,000 fixed. The level of budgeted fixed costs is determined by peak-period requirements. The West Plant requires 40% of the peak-period capacity and the East Plant requires 60%. The company allocates fixed and variable costs separately.
-For performance evaluation purposes, how much variable trucking department cost should be charged to the West Plant at the end of the year?
A)$22,500
B)$24,000
C)$21,000
D)$32,000

Question

Quizplus · Accepted Answer

The variable trucking department cost charged to the West Plant is $22,500. This is calculated as follows:Variable cost per ton = $0.30Budgeted tons to be delivered to West Plant = 70,000 tonsActual tons delivered to West Plant = 75,000 tonsVariable cost charged to West Plant = (Actual tons delivered to West Plant) x (Variable cost per ton)= 75,000 tons x $0.30= $22,500

The Hudson Block Company Has a Trucking Department That Delivers