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i dont need help with question 1 11,000 Problem 6-37 Antioch Extraction, which mines ore in Montana, uses a calendar year for both financial-reporting and
i dont need help with question 1
11,000 Problem 6-37 Antioch Extraction, which mines ore in Montana, uses a calendar year for both financial-reporting and Cost Behavior and Analysis; tax purposes. The following selected costs were incurred in December, the low point of activity, when High-Low Method 1.500 tons of ore were extracted: (LO 6-2, 6-4, 6-5) Straight-line depreciation $ 25,000 Royalties $135,000 2. Total cost for 1,650 tons: Charitable contributions Trucking and hauling 275,000 $823,500 Mining labor/fringe benefits 345,000 Mincurred only in December Peak activity of 2,600 tons occurred in June, resulting in mining labor/fringe benefit costs of $598,000, royalties of $201.000, and trucking and hauling outlays of $325.000. The trucking and hauling outlays exhibit the following behavior: Less than 1,500 tons $250,000 From 1,500-1,899 tons 275,000 From 1,900-2,299 tons 300,000 From 2,300-2,699 tons 325,000 Antioch uses the high-low method to analyze costs. Required: 1. Classify the five costs listed in terms of their behavior: variable, step-variable, committed fixed. discretionary fixed, step-fixed, or semivariable, Show calculations to support your answers for mining labor/fringe benefits and royalties. 2. Calculate the total cost for next February when 1,650 tons are expected to be extracted. 3. Comment on the cost-effectiveness of hauling 1.500 tons with respect to Antioch's trucking/haul- ing cost behavior. Can the company's effectiveness be improved? How? 4. Distinguish between committed and discretionary fixed costs. If Antioch were to experience severe economic difficulties, which of the two types of fixed costs should management try to cut? Why? 5. Speculate as to why the company's charitable contribution cost arises only in December Step by Step Solution
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