(Appendix 12B)Delta Railroad Has Two Operating Divisions-Freight and Passenger

question 37

Multiple Choice

(Appendix 12B) Delta Railroad has two operating divisions-Freight and Passenger.The Maintenance Department serves both divisions.Variable Maintenance Department costs are budgeted at $12 per thousand miles.The fixed Maintenance Department costs are budgeted at $800, 000 per year.The level of the fixed Maintenance Department costs are determined by the peak-period requirements.Data for last year follow: During last year, the Maintenance Department actually incurred $650, 000 in variable costs and $815, 000 in fixed costs. For performance evaluation purposes, how much of the Maintenance Department's actual variable costs should be retained in that department as a spending variance?

• A)$74, 000
• B)$0
• C)$50, 000
• D)$60, 000

Understand the methods of measuring a firm’s capital and investment.

Realize the importance of investing in software and technology as a form of human capital.

Understand the definition and value of capital in economic systems.

Differentiate between tangible, intangible, human, and social capital.

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Definitions:

Differential Cost

The difference in total cost that will result from selecting one choice over another.

Additional Cost

Expenses incurred that are above and beyond the initial forecast or budget for a project or product.

Differential Revenue

The difference in revenue generated under two different scenarios or as a result of a specific action.

Additional Cost

Expenses incurred that are over and above the originally planned or estimated costs.