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Problem 6-37 Cost Behavior and Analysis; High-Low Method (LO 6-2, 6-4, 6-5) 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 1,100 tons of ore were extracted: Straight-line depreciation Charitable contributions* Mining labor/fringe benefits Royalties Trucking and hauling $ 23,000 6,000 159,500 149,000 165,960 *Incurred only in December. Peak activity of 2,400 tons occurred in June, resulting in mining labor/fringe benefit costs of $348,000, royalties of $292,000, and trucking and hauling outlays of $205,960. The trucking and hauling outlays exhibit the following behavior: Less than 1,100 tons From 1,100-1,599 tons From 1,600-2,099 tons From 2,100-2,599 tons $145,960 165,960 185,960 205,960 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. 2. Calculate the total cost for next February when 1,400 tons are expected to be extracted. 3-a. Is hauling 1,100 tons with respect to Antioch's trucking/hauling cost behavior cost-effective? 3-b. If the company plans to extract 1,100 tons, at what number of tons can cost-effectiveness be achieved? 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? 5. Speculate as to why the company's charitable contribution cost arises only in December,

Problem 6-37 Cost Behavior and Analysis; High-Low Method (LO 6-2, 6-4, 6-5) 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 1,100 tons of ore were extracted: Straight-line depreciation Charitable contributions* Mining labor/fringe benefits Royalties Trucking and hauling $ 23,000 6,000 159,500 149,000 165,960 *Incurred only in December. Peak activity of 2,400 tons occurred in June, resulting in mining labor/fringe benefit costs of $348,000, royalties of $292,000, and trucking and hauling outlays of $205,960. The trucking and hauling outlays exhibit the following behavior: Less than 1,100 tons From 1,100-1,599 tons From 1,600-2,099 tons From 2,100-2,599 tons $145,960 165,960 185,960 205,960 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. 2. Calculate the total cost for next February when 1,400 tons are expected to be extracted. 3-a. Is hauling 1,100 tons with respect to Antioch's trucking/hauling cost behavior cost-effective? 3-b. If the company plans to extract 1,100 tons, at what number of tons can cost-effectiveness be achieved? 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? 5. Speculate as to why the company's charitable contribution cost arises only in December,

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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chSSO : Single Sign-On to all your Apps Saved Homework i Problem 6-37 Cost Behavior and Analysis; High-Low Method (LO 6-2, 6-4, 6-5) 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 1,100 tons of ore were extracted: Straight-line depreciation Charitable contributions* Mining labor/fringe benefits Royalties Trucking and hauling $ 23,000 6,000 159,500 149,000 165,960 *Incurred only in December. Peak activity of 2,400 tons occurred in June, resulting in mining labor/fringe benefit costs of $348,000, royalties of $292,000, and trucking and hauling outlays of $205,960. The trucking and hauling outlays exhibit the following behavior: Less than 1,100 tons From 1,100-1,599 tons From 1,600-2,099 tons From 2,100-2,599 tons $145,960 165,960 185,960 205,960 Antioch uses the high-low method to analyze costs. Required: 1. Classify the five costs listed in terms of their behavior: variable, step-variable, committed fixed, discretionary fixed, step-fixed, or semivariable. 2. Calculate the total cost for next February when 1,400 tons are expected to be extracted. 3-a. Is hauling 1,100 tons with respect to Antioch's trucking/hauling cost behavior cost-effective? 3-b. If the company plans to extract 1,100 tons, at what number of tons can cost-effectiveness be achieved? 4. Distinguish between committed and discretionary fixed costs. If Antioch were to experience severe economic difficulties, which of the two types of fixed costs should management try to cut? 5. Speculate as to why the company's charitable contribution cost arises only in December. < Prev 3 of 3 Next MacBook Pro #3 2$ & 4. 6. 7 8. E R Y U この くO
Transcribed Image Text:chSSO : Single Sign-On to all your Apps Saved Homework i Problem 6-37 Cost Behavior and Analysis; High-Low Method (LO 6-2, 6-4, 6-5) 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 1,100 tons of ore were extracted: Straight-line depreciation Charitable contributions* Mining labor/fringe benefits Royalties Trucking and hauling $ 23,000 6,000 159,500 149,000 165,960 *Incurred only in December. Peak activity of 2,400 tons occurred in June, resulting in mining labor/fringe benefit costs of $348,000, royalties of $292,000, and trucking and hauling outlays of $205,960. The trucking and hauling outlays exhibit the following behavior: Less than 1,100 tons From 1,100-1,599 tons From 1,600-2,099 tons From 2,100-2,599 tons $145,960 165,960 185,960 205,960 Antioch uses the high-low method to analyze costs. Required: 1. Classify the five costs listed in terms of their behavior: variable, step-variable, committed fixed, discretionary fixed, step-fixed, or semivariable. 2. Calculate the total cost for next February when 1,400 tons are expected to be extracted. 3-a. Is hauling 1,100 tons with respect to Antioch's trucking/hauling cost behavior cost-effective? 3-b. If the company plans to extract 1,100 tons, at what number of tons can cost-effectiveness be achieved? 4. Distinguish between committed and discretionary fixed costs. If Antioch were to experience severe economic difficulties, which of the two types of fixed costs should management try to cut? 5. Speculate as to why the company's charitable contribution cost arises only in December. < Prev 3 of 3 Next MacBook Pro #3 2$ & 4. 6. 7 8. E R Y U この くO
2. Calculate the total cost for next February when 1,400 tons are expected to be extracted. 3-a. Is hauling 1,100 tons with respect to Antioch's trucking/hauling cost behavior cost-effective? 3-b. If the company plans to extract 1,100 tons, at what number of tons can cost-effectiveness be achieved? 4. Distinguish between committed and discretionary fixed costs. If Antioch were to experience severe economic difficulties, 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. Complete this question by entering your answers in the tabs below. Req 1 Reg 2 Req 3A Req 3B Req 4 Req 5 Classify the five costs listed in terms of their behavior: variable, step-variable, committed fixed, discretionary fixed, step- fixed, or semivariable. a. Straight-line depreciation b. Charitable contributions c. Mining labor/fringe benefits d. Royalties e. Trucking and hauling Req 1 Req 2 > < Prev 3 of 3 Next MacBook Pro 2$ 4 6. 7 8. E R T Y
Transcribed Image Text:2. Calculate the total cost for next February when 1,400 tons are expected to be extracted. 3-a. Is hauling 1,100 tons with respect to Antioch's trucking/hauling cost behavior cost-effective? 3-b. If the company plans to extract 1,100 tons, at what number of tons can cost-effectiveness be achieved? 4. Distinguish between committed and discretionary fixed costs. If Antioch were to experience severe economic difficulties, 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. Complete this question by entering your answers in the tabs below. Req 1 Reg 2 Req 3A Req 3B Req 4 Req 5 Classify the five costs listed in terms of their behavior: variable, step-variable, committed fixed, discretionary fixed, step- fixed, or semivariable. a. Straight-line depreciation b. Charitable contributions c. Mining labor/fringe benefits d. Royalties e. Trucking and hauling Req 1 Req 2 > < Prev 3 of 3 Next MacBook Pro 2$ 4 6. 7 8. E R T Y
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