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Appendix 11B
Service Department Charges
Exercise 11B-1 (15 minutes)
1. and 2.
Northern
Plant
Southern
Plant
Total
Variable cost charges:
$0.25 per ton × 130,000 tons ...........
$ 32,500
$0.25 per ton × 50,000 tons .............
$ 12,500
$ 45,000
Fixed cost charges:
70% × $300,000 .............................
210,000
30% × $300,000 .............................
90,000
300,000
Total charges .....................................
$242,500
$102,500
$345,000
3. Part of the $364,000 in total cost will not be charged to the plants, as
follows:
Variable
Cost
Fixed
Cost
Total
Total actual cost incurred ....................
$54,000
$310,000
$364,000
Total charges (above) .........................
45,000
300,000
345,000
Spending variance ..............................
$ 9,000
$ 10,000
$ 19,000
The overall spending variance of $19,000 represents costs incurred in
excess of the budgeted $0.25 per ton variable cost and budgeted
$300,000 in fixed costs. This $19,000 in uncharged cost is the
responsibility of the Transport Services Department.
