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Antioch Extraction, which mines ore In Montana, uses a calendar year for both financlal-reporting and tax purposes. The following selected costs were Incurred In December,
Antioch Extraction, which mines ore In Montana, uses a calendar year for both financlal-reporting and tax purposes. The following selected costs were Incurred In December, the low point of activity. when 1,650 tons of ore were extracted: Straight-line depreciation Charitable contributions Mining labor/fringe benefits Royalties Trucking and hauling 39,58e 11,588 33e,888 135,258 327,980 "Incurred only In December. Peak activity of 2,950 tons occurred In June, resulting in mining labor/fringe benefit costs of $590,000, royalties of $206,750, and trucking and hauling outlays of $427,900. The trucking and haulilng outlays exhibit the following behavior Less than 1,65e tons From 1,658-2,149 tons From 2,158-2,649 tons From 2,65e-3,149 tons $277,98e 327,9e8 377,988 427,988 Antioch uses the high-low method to analyze costs. Required 1. Classify the five costs listed In terms of their behavior variable, step-varlable, committed fixed, discretionary fixed, step-fixed, or semivarlable 2. Calculate the total cost for next February when 1,950 tons are expected to be extracted. 3-a. Is hauling 1,650 tons with respect to Antioch's trucking/hauling cost behavior cost-effective? 3-b. Given the current scenario at what number of tons can cost-effectiveness be achleved? 4. Distinguish between committed and discretionary fixed costs. If Antioch were to experlence severe economic difficulties, which of the two types of fixed costs should management try to cut? 5. Speculate as to why the company's charitable contribution cost arises only In December
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