Skysong Mining Company purchased land on February 1, 2017, at a cost of $885,500

Question

Skysong Mining Company purchased land on February 1, 2017, at a cost of $885,500. It estimated that a total of 55,200 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 o stnct environmental protection laws. It estimates the fair value o this restoration obligation at s 103,500. It believes it will be able to sell the property afterwards or115,000. It incurred developmental costs $230,000 before it was able to do any mining. In 2017, resources removed totaled 27,600 tons. The company sold 20,240 tons. Exercise ining compay bte because oining. In 2 Compute the following information for 2017 (a) Per unit mineral cost (b) Total maternal cost of December 31, 2017, inventory (c) Total material cost in cost of goods sold at December 31, 2017 s

Explanation / Answer

a Per unit mineral cost = (885500+103500-115000+230000)/55200= 20 b Total material cost in inventory = (27600-20240)*20= 147200 c Total material cost in cost of goods sold=20240*20= 404800

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