Anaconda Mining Company shipped 9,000 tons of copper concentrate for $450,000 in March and 11,000 tons for $549,000 in April.Shipping costs for 12,000 tons to be shipped in May would be expected to be:
A)$548,780
B)$549,020
C)$594,000
D)$598,500

Question

Quizplus · Accepted Answer

Variable shipping cost per ton = Change in cost F1F1F1S1F1F1F10 Change in activity
= ($549,000 - $450,000)F1F1F1S1F1F1F10 (11,000 tons - 9,000 tons)
= $99,000 F1F1F1S1F1F1F10 2,000 tons
= $49.50 per ton
Fixed cost element of shipping cost = Total cost - Total variable cost
= $549,000 - ($49.50 per ton F1F1F1S1F1F1F10 11,000 tons)
= $549,000 - $544,500
= $4,500
Total shipping cost = $4,500 + $49.50 per ton F1F1F1S1F1F1F10 12,000 tons = $4,500 + $594,000 = $598,500

Anaconda Mining Company Shipped 9,000 Tons of Copper Concentrate for $450,000