Monroe Minerals Company purchased a copper mine for $120,000,000. The mine was expected to produce 50,000 tons of copper over its useful life. During 2013, the company extracted 6,000 tons of copper. The copper was sold for $4,500 per ton. Assume that the company incurred $8,040,000 in operating expenses during 2013. Based on this information, how much net income would Monroe report in 2013?

Question

Quizplus · Accepted Answer

$120,000,000/50,000 tons = $2,400/ton; 6,000 tons x $4,500 = $27,000,000 revenue; 6,000 x $2,400 = $14,400,000 depletion expense; $27,000,000 revenue - $14,400,000 depletion - $8,040,000 operating expenses = $4,560,000 net income

Monroe Minerals Company Purchased a Copper Mine for $120,000,000