Deep Pit Mining Mines Three Products

question 7

Multiple Choice

Deep Pit Mining mines three products. Gold ore sells for $1,000 per ton, variable costs are $600 per ton, and fixed mining costs are $250,000. The segment margin for 2018 was $(100,000) . The management of Deep Pit Mining was considering dropping the mining of gold ore. Only one-half of the fixed expenses are direct and would be eliminated if the segment was dropped.
What were the sales (in tons) for 2018?

• A)1,000 tons
• B)375 tons
• C)250 tons
• D)200 tons

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Definitions:

Adjusted Gross Income (AGI)

The total gross income minus specific deductions defined by the IRS, used to determine taxable income.

Qualifying Relative

A term used in tax law to describe someone who doesn’t have to live with the taxpayer all year but must meet certain financial support and income criteria to be claimed as a dependent.

Gross Income Test

A requirement for determining if someone can be claimed as a dependent, based on their income level.

Specific Tests

Refer to criteria or conditions applied to determine eligibility or compliance in various contexts, such as tax law or regulations.