Question
Antioch Extraction, which mines ore in Montana, uses a calendar year for both financial reporting and tax purposes. The following selected costs were incurred in
Antioch Extraction, which mines ore in Montana, uses a calendar year for both financial reporting and tax purposes. The following selected costs were incurred in December, the low point of activity, when 1600 tons of ore were extracted:
-straight line depreciation: $38,000
-charitable contributions: $11,000 (incurred in december only)
-mining labor/fringe benefits: $312,000
-royalties: $139,000
-trucking and hauling: $311,405
Peak activity of 2900 tons occurred in June, resulting in mining labor/fringe benefit costs of $565,500, royalties of $217,000, and trucking/hauling outlays of $406,405. The trucking and hauling outlays exhibit the following behavior:
less than 1600 tons: $263,905
From 1600-2099 tons: $311,405
From 2100-2599 tons: $358,905
From 2600-3099 tons: $406,405
Costs are classified as follows: straight line depreciation--committed fixed
charitable contributions--discretionary fixed
mining labor/fringe benefits--variable
royalties--semivariable
trucking and hauling--step-fixed
Antioch uses the high-low method to analyze costs.
QUESTION--CALCULATE THE TOTAL COST FOR NEXT FEBRUARY WHEN 1900 TONS ARE EXPECTED TO BE EXTRACTED
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