Question

Pomona operates a landfill and accounts for it using enterprise fund. The closure costs are estimated to be $60 million. If max capacity of this landfill is 10 million tons of waste and that waste will be accepted for 6 years. During 2020, 6 million tons of waste was accepted. The charge costs for 2020 would be: a. $ 4 million. b. $ 7 million. c. $ 6.67 million. d. $ 36 million.

Answer 1

d. $ 36 million.

Step-by-step explanation:

The cost is allocated on the basis of the weight of the wastage accepted in the period.

As per the given data

Closure costs = $60 million

Maximum Capacity of Landfill = 10 million tons

Waste accepted in 2020 = 6 million tone

The charge of cost can be calculated as follow

Cost charged in 2020 = Closure costs x Weight of waste accepted in the year

Cost charged in 2020 = $60 million x 6 million / 10 million

Cost charged in 2020 = $60 million x 0.6

Cost charged in 2020 = $36 million