Given the current scenario at what number of units cost

Reference no: EM13485159

Lone Mountain Extraction, which mines ore in Idaho, 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 1,400 tons of ore were extracted:


Straight-line depreciation	$	30,000
Charitable contributions*		12,000
Mining labor/fringe benefits		315,000
Royalties		140,000
Trucking and hauling		280,000

*Incurred only in December.

Peak activity of 2,700 tons occurred in June, resulting in mining labor/fringe benefit costs of $607,500, royalties of $224,500, and trucking and hauling outlays of $360,000. The trucking and hauling outlays exhibit the following behavior:


Less than 1,400 tons	$	240,000
From 1,400-1,899 tons		280,000
From 1,900-2,399 tons		320,000
From 2,400-2,899 tons		360,000

Lone Mountain Extraction uses the high-low method to analyze costs.

Given the current scenario at what number of units cost effectiveness can be achieved?

Reference no: EM13485159

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