Question

n january 2020, expo mining company paid $4,400,000 to buy a new mine. expo estimates it will be able to remove 4,000,000 tonnes of ore from the mine. it also estimates that the property will be worth $300,000 after the ore has been extracted. expo incurred a total of $900,000 in development costs when preparing the mine for production. if total depletion cost was $625,000 for the year, how many units were extracted during the year? select answer from the options below 471,698 640,625 781,250 500,000

Answer 1

To determine the number of units extracted during the year, divide the total depletion cost by the depletion rate per unit. In this case, the number of units extracted is 5,760,000 tonnes.

Step-by-step explanation:

To determine the number of units extracted during the year, we need to calculate the depletion rate per unit and then divide the total depletion cost by it. The depletion rate per unit is calculated as the total depletion cost divided by the number of units. In this case, the total depletion cost is $625,000 and the number of units is the estimated amount of ore that can be removed from the mine, which is 4,000,000 tonnes. Therefore, the depletion rate per unit is $625,000 / 4,000,000 tonnes = $0.15625 per tonne.

Next, we divide the development costs by the depletion rate per unit to determine the number of units extracted. The development costs are $900,000, so the number of units extracted is $900,000 / $0.15625 per tonne = 5,760,000 tonnes.

Therefore, the number of units extracted during the year is 5,760,000 tonnes. None of the options provided match this result, so the correct answer is not among the given choices.