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I have a homework about managerial accounting using the high-low method. I hope someone can help me with this. Lone Mountain Extraction, which mines ore
I have a homework about managerial accounting using the high-low method. I hope someone can help me with this.
Lone Mountain Extraction, which mines ore in Idaho, 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 1,600 tons of ore were extracted: Straight-line depreciation Charitable contributions* $ 38,000 11,000 312,00 0 139,00 0 311,405 Mining labor/fringe benefits Royalties Trucking and hauling *Incurred only in December. Peak activity of 2,900 tons occurred in June, resulting in mining labor/fringe benefit costs of $565,500, royalties of $217,000, and trucking and hauling outlays of $406,405. The trucking and hauling outlays exhibit the following behavior: Less than 1,600 tons From 1,600-2,099 tons From 2,100-2,599 tons From 2,600-3,099 tons $ 263,90 5 311,405 358,90 5 406,40 5 Lone Mountain Extraction uses the high-low method to analyze costs. Calculate the total cost for next February when 1,900 tons are expected to be extracted. Is hauling 1,600 tons with respect to Lone Mountain's trucking/hauling cost behavior cost effective? Given the current scenario at what number of units cost effectiveness can be achieved?Step by Step Solution
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