Ch. 6 HW notes b.docx - Antioch Extraction which mines ore in Montana uses a calendar year for both financial-reporting and tax purposes The following

Ch. 6 HW notes b.docx - Antioch Extraction which mines ore...

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Antioch Extraction, which mines ore in Montana, uses a calendar year for bothfinancial-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$25,000Charitable contributions*11,000Mining labor/fringe benefits345,000Royalties135,000Trucking and hauling275,000*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$250,000From 1,500–1,899 tons275,000From 1,900–2,299 tons300,000From 2,300–2,699 tons325,000Antioch uses the high-low method to analyze costs.Required:1.1. 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 Committed fixed selected answer correct b. Charitable contributions Discretionary fixed selected answer correct c. Mining labor/fringe benefits Variable selected answer correct d. Royalties Semivariable selected answer correct e. Trucking and hauling Step-fixed selected answer correct

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