The Ava Stone 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 $394,000 per year in fixed
costs and $.20 per ton variable cost. Last year, 78,000 tons of
crushed stone were budgeted to be delivered to the West Plant and
120,000 tons of crushed stone to the East Plant. During the year,
the trucking department actually delivered 82,000 tons of crushed
stone to the West Plant and 107,000 tons to the East Plant. Its
actual costs for the year were $78,000 variable and $409,000 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 of the actual
trucking department cost should not be charged to the plants at the
end of the year?
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