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

Question

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 $

Explanation / Answer

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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