Use the following information to answer questions
On June 30, 2010, Jumbo Corp. purchased a mine for $2,700,000 with an estimated 1,500,000 tons of extractable ore. The mine has an estimated value of $300,000 after the ore has been extracted. During the first year, 150,000 tons of ore were extracted and 100,000 tons were sold.
-What amount of ore cost is included in Cost of Goods Sold for 2010?

Question

Use the following information to answer questions 
On June 30, 2010, Jumbo Corp. purchased a mine for $2,700,000 with an estimated 1,500,000 tons of extractable ore. The mine has an estimated value of $300,000 after the ore has been extracted. During the first year, 150,000 tons of ore were extracted and 100,000 tons were sold.
-What amount of ore cost is included in Cost of Goods Sold for 2010?

Quizplus · Accepted Answer

The cost of acquiring the mine is $2,700,000, and it is expected to have a residual value of $300,000 after all the ore has been extracted. This leaves $2,400,000 ($2,700,000 - $300,000) to be allocated to the cost of the extracted ore. With 1,500,000 tons of extractable ore, the cost per ton is $1.60 ($2,400,000 / 1,500,000 tons). For the 100,000 tons sold in 2010, the cost included in Cost of Goods Sold is $160,000 (100,000 tons * $1.60 per ton).

Use the Following Information to Answer Questions