The Juab Company Has a Freight Department That Delivers Scrap

question 8

Multiple Choice

The Juab Company has a Freight Department that delivers scrap metal from salvage yards to its two fabricating facilities--the Emory Plant and the Salina Plant. Operating data for the two plants for last year follow: Budgeted costs consist of $150,000 fixed costs and $0.50 variable cost for each ton of scrap delivered to the plants. Actual costs incurred in the Freight Department were $52,800 variable, and $165,000 fixed. Juab allocates variable and fixed service department costs separately. The level of budgeted fixed costs is determined by peak-period needs. The Emory Plant requires 40% of the peak-period capacity and the Salina Plant requires 60%.
-How much of the actual Freight Department cost should not be charged to either plant at the end of the year for performance evaluation purposes?

• A)$0
• B)$15,000
• C)$17,800
• D)$27,800