Question

A coal mine cost $ 1 comma 009 comma 000 and is estimated to hold 59 comma 000 tons of coal. There is no residual value. During the first year of​ operations, 9 comma 000 tons are extracted and sold. Calculate depletion per unit.​ (Round your answer to the nearest​ cent.)

Answer 1

$57.46

Step-by-step explanation:

The computation of depletion per unit is shown below:-

Depletion per unit = (Salvage value ÷ Total units to be recovered) × (Mine cost ÷ Depletion base)

= (9,000 ÷ 59,000) × ($1,009,000 ÷ 9,000)

= 0.5125 × 112.1111

= $57.46

Therefore for computing the depletion per unit base we simply applied the above formula.