Reference no: EM132657488

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 1,150 tons of ore were extracted:

Straight-line depreciation$24,500
Charitable contributions* 6,500
Mining labor/fringe benefits 172,500
Royalties 150,250
Trucking and hauling 177,205
*Incurred only in December.

Peak activity of 2,450 tons occurred in June, resulting in mining labor/fringe benefit costs of $367,500, royalties of $286,750, and trucking and hauling outlays of $222,205. The trucking and hauling outlays exhibit the following behavior:

Less than 1,150 tons$154,705
From 1,150-1,649 tons 177,205
From 1,650-2,149 tons 199,705
From 2,150-2,649 tons 222,205

Antioch uses the high-low method to analyze costs.

Question 1: Calculate the total cost for next February when 1,450 tons are expected to be extracted.

Question 2: If the company plans to extract 1,150 tons, at what number of tons can cost-effectiveness be achieved?