Question

Tamarisk, Inc. purchased for $7.5860 million a mine that is estimated to have 37.93 million tons of ore and no salvage value. In the first year, 7.23 million tons of ore are extracted.

Calculate depletion cost per unit.

Answer 1

Answer: 0.2

Step-by-step explanation:

Divide total cost of mine (7.586) and divided it by total estimated tons of ore (37.93)

Answer 2

$1.446 million

Step-by-step explanation:

Depletion cost per unit = (Total ore extracted in the first year / total amount of ore ) x cost of mine

(7.23 million/ 37.93 million ) x $7.5860 million = $1.446 million

I hope my answer helps you