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

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 fixed costs should be retained in that department as a spending variance?

A) $0
B) $15, 000
C) $12, 000
D) $18, 000