Hebert Corporation extracts ore for eight different companies in Quebec. 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 semi-variable 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
Hebert uses the high-low method to analyze cost behaviour.
Required:
A. Calculate the semi-variable cost for an upcoming month when 875 tons will be extracted.
B. Calculate the total cost for that same month.
C. Hebert uses Charron Trucking Limited to haul extracted ore. Charron's monthly charges are as follows. $\begin{array} { l r }
800 - 1,099 \text { tons } & \$ 70,000 \
1,100 \text { tons } - 1,399 \text { tons } & 90,000 \
1,400 + \text { tons } & 110,000
\end{array}$ 1. From a cost behaviour perspective, what type of cost is this?
If Hebert plans to extract 875 tons, is the company being very "cost effective" with respect to Charron's billing rates? Briefly discuss.

Question

Hebert Corporation extracts ore for eight different companies in Quebec. 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 semi-variable 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
Hebert uses the high-low method to analyze cost behaviour.
Required:
A. Calculate the semi-variable cost for an upcoming month when 875 tons will be extracted.
B. Calculate the total cost for that same month.
C. Hebert uses Charron Trucking Limited to haul extracted ore. Charron's monthly charges are as follows. $\begin{array} { l r } 
800 - 1,099 \text { tons } & \$ 70,000 \
1,100 \text { tons } - 1,399 \text { tons } & 90,000 \
1,400 + \text { tons } & 110,000
\end{array}$ 1. From a cost behaviour perspective, what type of cost is this?
If Hebert plans to extract 875 tons, is the company being very "cost effective" with respect to Charron's billing rates? Briefly discuss.

Quizplus · Accepted Answer

The Answer of Hebert Corporation extracts ore for eight different companies in Quebec. 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 semi-variable 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
Hebert uses the high-low method to analyze cost behaviour.
Required:
A. Calculate the semi-variable cost for an upcoming month when 875 tons will be extracted.
B. Calculate the total cost for that same month.
C. Hebert uses Charron Trucking Limited to haul extracted ore. Charron's monthly charges are as follows. $\begin{array} { l r } 
800 - 1,099 \text { tons } & \$ 70,000 \
1,100 \text { tons } - 1,399 \text { tons } & 90,000 \
1,400 + \text { tons } & 110,000
\end{array}$ 1. From a cost behaviour perspective, what type of cost is this?
If Hebert plans to extract 875 tons, is the company being very "cost effective" with respect to Charron's billing rates? Briefly discuss.

Hebert Corporation Extracts Ore for Eight Different Companies in Quebec