A coal mine cost $1,009,000 and is estimated to hold 57,000 tons of coal. There is no residual value. During the first year of operations, 12,000 tons are extracted and sold. Calculate depletion per unit. (Round your answer to the nearest cent.)

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Business

Tania Malone

23 February, 19:52

A coal mine cost $1,009,000 and is estimated to hold 57,000 tons of coal. There is no residual value. During the first year of operations, 12,000 tons are extracted and sold. Calculate depletion per unit. (Round your answer to the nearest cent.)

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Answers (1)

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Angela Kidd · Answer 1

The answer is: The depletion is $17.70 per unit.

Explanation:

We have the depletion per unit is calculated as below:

Depletion per unit = (Machine cost - Residual value at the end of useful life) / Expected capacity;

So, apply in to the question we have:

Depletion per unit = (Cost of coal machine - Residual value) / Expected tons of coal hold = (1,009,000 - 0) / 57,000 = 1,009,000 / 57,000 = $17.70 per unit (round to the nearest cent).

Thus, the depletion is $17.70 per unit.