(Appendix 12B)The Hudson Block Company Has a Trucking Department That

question 10

Multiple Choice

(Appendix 12B) The Hudson 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 $340, 000 per year in fixed costs and $0.30 per ton variable cost.Last year, 70, 000 tons of crushed stone were budgeted to be delivered to the West Plant and 100, 000 tons of crushed stone to the East Plant.During the year, the trucking department actually delivered 75, 000 tons of crushed stone to the West Plant and 90, 000 tons to the East Plant.Its actual costs for the year were $65, 000 variable and $350, 000 fixed.The level of budgeted fixed costs is determined by peak-period requirements.The West Plant requires 40% of the peak-period capacity and the East Plant requires 60%.The company allocates fixed and variable costs separately. For performance evaluation purposes, how much variable trucking department cost should be charged to the West Plant at the end of the year?

• A)$22, 500
• B)$24, 000
• C)$21, 000
• D)$32, 000

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Definitions:

Cost of Goods Sold

The direct costs attributable to the production of the goods sold by a company.

Debit

An accounting entry that increases asset or expense accounts, or decreases liability, equity, or revenue accounts.

Credit

The provision of resources, such as money, goods, or services, with the expectation of future repayment, often with interest.

Predetermined Overhead

An estimated overhead cost rate used to allocate overhead costs to products or services based on a planned activity level.