Question

Bramble Mining Company purchased land on February 1, 2017, at a cost of $975,900. It estimated...

Bramble Mining Company purchased land on February 1, 2017, at a cost of $975,900. It estimated that a total of 57,600 tons of mineral was available for mining. After it has removed all the natural resources, the company will be required to restore the property to its previous state because of strict environmental protection laws. It estimates the fair value of this restoration obligation at $110,700. It believes it will be able to sell the property afterwards for $123,000. It incurred developmental costs of $246,000 before it was able to do any mining. In 2017, resources removed totaled 28,800 tons. The company sold 21,120 tons. Compute the following information for 2017.

(a) Per unit mineral cost $

(b) Total material cost of December 31, 2017, inventory $

(c) Total material cost in cost of goods sold at December 31, 2017 $

Homework Answers

Answer #1
Req a:
Cost of Mines purchased 975900
Add: Restoration obligations 110,700
Add: Development charges 246,000
less: Salvage value -123000
Net value to deplete 1,209,600
Divide: Number of uints 57,600
Depletion expense per tone 21
Per unit cost of per ton mineral: $ 21 per ton
Req b:
Total extracted 28800
Less: Sold 21120
Ending units 7680
Material cost in inventory = 7680 tonnes@21 = $161,280
Req c:
Cost of goods sold 21120 Units
Material cost per unnit 21
Total material cost 443520
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