Question

Aspen Ore purchased a vein of coal ore for $5,300,000. It is estimated that 32,000,000 tons of ore are available to be extracted. The estimated depletion expense for this year’s extraction of 2,790,000 tons of ore is: (Round any intermediary calculations to the nearest cent and your final answer to the nearest dollar.)

Answer 1

$462,094

Step-by-step explanation:

Depletion expense is a charge against profits for the use of natural resources. It is calculated by multiply the number of consumed units of the natural resources by the cost per unit.

Cost per unit = Total cost / total number of units expected to be extracted = $5,300,000 / 32,000,000 = 0.165625

Depletion expense = Cost per unit x extracted units = 0.165625 x 2,790,000 = $462,094