Running head: Cost Allocation Concepts 1 Week Four – Cost Allocation Concepts Student Name ACC 650 February 10, 2021 Cost Allocation Concepts 2 Problem 6–37 Required: 1. Classify the five costs listed in terms of their behavior: variable, step-variable, committed fixed, discretionary fixed, step-fixed, or semi-variable. Show calculations to support your answers for mining labor/fringe benefits and royalties. The analysis and classification based on the high-low method 1500 ton ($) Depreciation 25 000 Charitable contribution 11 000 Mining labor/ fringe 345 000 benefit Royalties 135 000 Trucking and hauling 275 000 2600 ton ($) 25 000 0 598 000 Nature of cost Committed fixed cost Discretionary fixed cost Variable cost 210 000 325 000 Semi-variable cost Step fixed cost -Variable per cost unit =difference in variable /difference in tons (598 000-345 000)/ (2600-1500) = $230 per ton Fixed cost- mining = total cost – variable cost 598 000-(230 *2600)= $ 0 -Variable cost per unit- royalty = difference in total costs /difference in tons (201000-135000)/ (2600-1500) =$ 60 per ton Fixed cost- royalty = total cost – variable cost 201 000- ($60 * 2600) = $ 45 000 2. Calculate the total cost for next February when 1,650 tons are expected to be extracted. Particulars Depreciation Mining labor/fringe benefit Royalties- variables Royalties- fixed Trucking and hauling Total cost 1650 ton ($) 25 000 379 500 99 000 45 000 275 000 823 500 Cost Allocation Concepts 3 3. Com ...
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