Question

Montana mining company pays 3,906,110 for an ore deposit containing 1,591,000 tons. The company installs machinery in the mine costing 196,500. Both the ore and machinery will have no salvage value after the ore is completely mined. Montana mines and sells 160,300 tons of ore during the year. What is the total cost of the ore mined?

1) 3,906,110
2) 3,709,610
3) 3,709,610.50
4) 3,709,610.90

Answer 1

The total cost of the ore mined is $392,615.

Step-by-step explanation:

To find the total cost of the ore mined, we need to calculate the cost of the ore and the cost of the machinery. The cost of the ore can be found by dividing the total amount paid for the deposit by the total amount of ore in tons. In this case, the cost of the ore is $3,906,110 ÷ 1,591,000 tons = $2.45 per ton. The cost of the machinery is $196,500.

To calculate the total cost of the ore mined, we need to multiply the cost of the ore per ton by the amount of ore mined. In this case, the total cost of the ore mined is $2.45 per ton × 160,300 tons = $392,615.

Therefore, the total cost of the ore mined is $392,615