Problem 6.37- Antioch Extraction: Cost behavior high-low method

Asked by bizgrad
Dated: 5th Dec'18 01:06 PM
Bounty offered: $20.00

Problem 6.37- Antioch Extraction: Cost behavior high-low method

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 depression 25,000 Royalties 135,000

Charitable contributions 11,000 Trucking and hauling 275,000

Mining labor/fringe benefits 345,000

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



Problem 7.38 Sales Mix and Employee Compensation; Operating Changes

Lawrence Corporation sells two ceiling fans, Deluxe and Basic. Current sales total 60,000 units, consisting of 39,000 Deluxe units and 21,000 Basic units. Selling price and variable cost information follow.

Deluxe Basic

Selling price ..................................................................................................$86 $74

Variable cost ................................................................................................. $65 $41

Salespeople currently receive flat salaries that total $400,000. Management is contemplating a change to a compensation plan that is based on commissions in an effort to boost the company’s presence in the marketplace. Two plans are under consideration:

Plan A: 10% commission computed on gross dollar sales. Deluxe sales are expected to total 45,500 units; Basic sales are anticipated to be 19,500 units.

Plan B: 30% commission computed on the basis of production contribution margins.

Deluxe sales are anticipated to be 26,000 units; Basic sales are expected to total 39,000 units.

Required:

Problem 6.37- Antioch Extraction: Cost behavior high-low method
Answered by bizgrad
Expert Rating: 2387 Ratings
Dated: 5th Dec'18 01:06 PM
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attachments

antioch.docx (23.47 KB)
Preview of antioch.docx
CostRoyalties5135,0005201,000Semi     and   Fixed CostVariable     Unit       Difference   Total Cost/Difference     Per       Mining   Total Cost     Cost=       230   2,600) =     Per       =   in Total
rashi.docx (39.63 KB)
Preview of rashi.docx
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