Stellar Mining Company purchased land on February 1, 2017, at a cost of $1,150,3
ID: 2571123 • Letter: S
Question
Stellar Mining Company purchased land on February 1, 2017, at a cost of $1,150,300. It estimated that a total of 54,600 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 $101,700. It believes it will be able to sell the property afterwards for $113,000. It incurred developmental costs of $226,000 before it was able to do any mining. In 2017, resources removed totaled 27,300 tons. The company sold 20,020 tons.
Compute the following information for 2017.
Explanation / Answer
Answer =1 CALCULATION OF PER UNIT OF MINERAL COST Cost of Land = $ 11,50,300.00 Add: Development Cost = $ 2,26,000.00 Add: Fair Value of Restoration obligation= $ 1,01,700.00 Less: Sale Value of the property aFterwartds = $ 1,13,000.00 Total Cost of the mines = $ 15,91,000.00 Total minerals Available = 54,600 Tons Cost per unit (Per Ton) = Total cost of the mines / Total unit of mineral available Cost per unit (Per Ton) = $ 15,91,000 / 54,600 Tons Cost per unit (Per Ton) = $ 29.14 Per Ton Answer = 2 Total Material Cost of December 31 ,2017 inventory Material Escavated in the year 2017 = 27300 Tons Less: Sold in the year 2017 = 20020 Tons Balance inventory at the Dec, 31 2017 = 7280 Tons X Multiply By Cost per Ton = $ 29.14 Per Ton Total Material Cost of December 31 ,2017 inventory = $ 2,12,139.20 Answer =3 Cost of Goods Sold = Unit Sold X Cost per Ton Material Sol in the year 2017 = 20020 Tons X Multiply By Cost per Ton = $ 29.14 Per Ton Cost of Goods Sold = $ 5,83,382.80
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