Ai Corporation Extracts Ore for Eight Different Companies in Colorado

question 57

Essay

Ai Corporation extracts ore for eight different companies in Colorado.The firm anticipates variable costs of $65 per ton along with annual fixed overhead of $840,000,which is incurred evenly throughout the year.These costs exclude the following semivariable costs,which are expected to total the amounts shown for the high and low points of ore extraction activity:
March (850 tons): $39,900
August (1,300 tons): $46,200
A-1 uses the high-low method to analyze cost behavior.
Required:
A.Calculate the semivariable cost for an upcoming month when 875 tons will be extracted.
B.Calculate the total cost for that same month.
C.1.Step-fixed.
2.No.Notice that the bill will be $70,000 for A-1's tonnage,and the company could have Cortez haul up to 1,099 tons for the same cost.Ideally,Ai should try to move to the right side of the step to get a better return on its investment.
C.Ai uses Cortez Trucking to haul extracted ore.Cortez's monthly charges are as follows:

1.From a cost behavior perspective,what type of cost is this?
2.If Ai plans to extract 875 tons,is the company being very "cost effective" with respect to Cortez's billing rates? Briefly discuss.

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Definitions:

Conformity Pressures

The influence exerted by a group that encourages individuals to change their attitudes, values, or behaviors to align with group norms.

Asch

Refers to Solomon Asch, known for his research on conformity, specifically the experiments demonstrating the influence of group pressure on opinions.

Crutchfield Situation

A technique used in social psychology experiments to study conformity, where individuals must make judgments while being exposed to the presumed opinions of others.

Asch Situation

An experiment by Solomon Asch that demonstrated the power of conformity in groups, where individuals often agree with a consensus even if it is clearly incorrect.