Problem 19.3A

ROBLEM 19.3A arget Costing page 879 Ieiger's owners currently demand a return of 20 percent of the market price of iron ore. 1structions a. If the current market price of iron ore is $8 per ton, what is Meiger's target cost per ton? . Given the $8 market price, should either of the mines be opened? to $45,000 if it is installed. Given the current $8 market price, should Meiger install the conveyor and open Site B? Problem 19.3A Sample Worked Problem: Problem 19.4B Meiger Mining Part A Target Cost = Target Price - Target Profit \begin{tabular}{|l|l|} \hline Target Price & \\ \hline Target Profit & \\ \hline Target Cost & \\ \hline \end{tabular} Part B \begin{tabular}{|l|l|l|l|} \hline \multicolumn{2}{|l|}{} & Site A & Site B \\ \hline \multicolumn{2}{|l|}{ Total cost per ton: } & & \\ \hline \multicolumn{2}{|l|}{ Variable costs } & & \\ \hline \multicolumn{2}{|l|}{ Fixed costs } & & \\ \hline \multicolumn{2}{|l|}{ Total cost per ton } & & \\ \hline \end{tabular} Description Part C If the conveyor is purchased, the total fixed costs associated with Site B will increase by $35,000($25,000 purchase price plus $10,000 in additional restoration costs) to a total of $515,000. Thus, the cost per ton of operating Site B would be: Variable costs per ton Fixed costs per ton Total cost per ton Description