(Appendix 11B) the Downstate Block Company Has a Trucking Department

question 29

Multiple Choice

(Appendix 11B) The Downstate 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 $700,000 per year in fixed costs and $0.50 per ton variable cost. Last year, 75,000 tons of crushed stone were budgeted to be delivered to the West Plant and 90,000 tons of crushed stone to the East Plant. During the year, the trucking department actually delivered 74,000 tons of crushed stone to the West Plant and 92,000 tons to the East Plant. Its actual costs for the year were $81,000 variable and $708,000 fixed. The level of budgeted fixed costs is determined by peak-period requirements. The West Plant requires 45% of the peak-period capacity and the East Plant requires 55%. The company allocates fixed and variable costs separately.
-For performance evaluation purposes,how much of the actual trucking department cost should not be charged to the plants at the end of the year?

• A) $10,000
• B) $6,000
• C) $0
• D) $8,000

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