MANAGERIAL ACCOUNTING-CUSTOM EBOOK>I<
12th Edition
ISBN: 9781307661217
Author: HILTON
Publisher: INTER MCG2
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Textbook Question
Chapter 6, Problem 37P
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 1,500 tons of ore were extracted:
*Incurred 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:
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/hauling 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.
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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 1,500 tons of ore were extracted:
Already answered first part need help with # 4 and 5
2. Total cost for 1,650 tons: $823,500
Straight-line depreciation ..........................$ 25,000
Royalties .....................................$135,000
Charitable contributions* ...........................11,000
Trucking and hauling ..................275,000
Mining labor/fringe benefits .......................345,000.
*Incurred 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 .................................................$250,000
From 1,500–1,899 tons…
Antioch Extraction, which mines ore in Montana, uses a calendar year for both financial-reporting and tax purposes. The following selected costs were incurred in December, the low point of activity, when 1,500 tons of ore were extracted:
Straight-line depreciation ..........................$ 25,000. Royalties .....................................$135,000
Charitable contributions* ...........................11,000. Trucking and hauling ..................275,000
Mining labor/fringe benefits .......................345,000
*Incurred 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…
Montana Mining Co. pays $3,926,550 for an ore deposit containing 1,572,000 tons. The company installs machinery in the mine
costing $152,400, which will be abandoned when the ore is completely mined. Montana mines and sells 145,700 tons of ore during the
year.
Prepare the year-end entries to record both the ore deposit depletion and the mining machinery depreciation. Mining machinery
depreciation should be in proportion to the mine's depletion. (Do not round intermediate calculations. Round your final answers to
the nearest whole number.)
View transaction list
Journal entry worksheet
es
Record the year-end adjusting entry for the depletion expense of ore mine.
Note: Enter debits before credits.
Date
General Journal
Debit
Credit
Dec 31
Vlew general Journal
Record entry
Clear entry
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Chapter 6 Solutions
MANAGERIAL ACCOUNTING-CUSTOM EBOOK>I<
Ch. 6 - Describe the importance of cost behavior patterns...Ch. 6 - Define the following terms, and explain the...Ch. 6 - Suggest an appropriate activity base (or cost...Ch. 6 - Draw a simple graph of each of the following types...Ch. 6 - Explain the impact of an increase in the level of...Ch. 6 - Explain why a manufacturers cost of supervising...Ch. 6 - Explain the impact of an increase in the level of...Ch. 6 - Prob. 8RQCh. 6 - Indicate which of the following descriptions is...Ch. 6 - Prob. 10RQ
Ch. 6 - What is meant by a learning curve? Explain its...Ch. 6 - Suggest an appropriate independent variable to use...Ch. 6 - What is an outlier? List some possible causes of...Ch. 6 - Explain the cost estimation problem caused by...Ch. 6 - Describe the visual-fit method of cost estimation....Ch. 6 - What is the chief drawback of the high-low method...Ch. 6 - Explain the meaning of the term least squares in...Ch. 6 - Prob. 18RQCh. 6 - Prob. 19RQCh. 6 - List several possible cost drivers that could be...Ch. 6 - Prob. 21RQCh. 6 - Prob. 22ECh. 6 - The behavior of the annual maintenance and repair...Ch. 6 - WMEJ is an independent television station run by a...Ch. 6 - Jonathan Macintosh is a highly successful...Ch. 6 - Jonathan Macintosh is a highly successful...Ch. 6 - The Iowa City Veterinary Laboratory performs a...Ch. 6 - Chillicothe Meat Company produces one of the best...Ch. 6 - Rio Bus Tours has incurred the following bus...Ch. 6 - Prob. 31ECh. 6 - Prob. 32ECh. 6 - Prob. 33ECh. 6 - Gator Beach Marts, a chain of convenience grocery...Ch. 6 - For each of the cost items described below, choose...Ch. 6 - The following selected data were taken from the...Ch. 6 - Antioch Extraction, which mines ore in Montana,...Ch. 6 - Nations Capital Fitness, Inc. operates a chain of...Ch. 6 - The Allegheny School of Music has hired you as a...Ch. 6 - Prob. 40PCh. 6 - (Note: Instructors who wish to cover all three...Ch. 6 - Refer to the original data in the preceding...Ch. 6 - Shortly after being hired as an analyst with...Ch. 6 - The controller of Chittenango Chain Company...Ch. 6 - Dana Rand owns a catering company that prepares...Ch. 6 - Prob. 48PCh. 6 - Earth and Artistry, Inc. provides commercial...Ch. 6 - Prob. 51CCh. 6 - Refer to the data and accompanying information in...
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