Answer:
a. $40 per ton
Explanation:
[tex]\frac{Activity\: Pool}{Cost Driver}= Activity\:Rate[/tex]
Here we depreciate considering the cost to acquire the mineral rights and other cost needed to start the business. In this case, we are only given with the acquisition of the land.
and the expected amount of tonds of minerals will be mined:
$100,000,000 / 2,500,000 tonds = $40 per ton.
Answer:
a. $40 per ton
Explanation:
The rate of depletion is a function of two variables;the cost of the mineral right and the tonnage of resources available.
If in the current year, 500,000 tons were mined and sold then the worth of what was sold compared to the worth of the mineral rights is
= ( 500,000/2,500,000) × $100,000,000
= $20,000,000
However, the rate of depletion in dollars per ton
= $100,000,000/2,500,000
=$40 per ton
Option a. $40 per ton is right.
