(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

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Definitions:

Productive

Relating to or having the power to generate or produce goods, services, or results through effective use of resources.

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Eminent individuals refer to people who are highly distinguished or renowned in their fields or professions.

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The time in a woman's life, typically between 45 and 55 years of age, when menstrual cycles cease permanently, marking the end of reproductive capability.

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The process of ending or being brought to an end, commonly used in the context of stopping a behavior or activity, such as smoking cessation.