Question

Buffalo Mining Company purchased land on February 1, 2020, at a cost of $1.252,100. It estimated that a total of 57.000 tons of mineral was available for mining. After it has removed all the natural resources, the company will be required to restore the property to its previous state because of strict environmental protection laws. It estimates the fair value of this restoration obligation at $108,900. It believes it will be able to sell the property afterwards for $121,000. It incurred developmental costs of $242,000 before it was able to do any mining. In 2020, resources removed totaled 28,500 tons. The company sold 20,900 tons. Compute the following information for 2020. $ (a) Per unit mineral cost (b) Total material cost of December 31, 2020, inventory (c) Total material cost in cost of goods sold at December 31, 2020 $ $

Answer 1

a ler unit Mining lotte- Total Cacte - Saliage Value Total estimated mineral available Total caste Coat of land $ 1252100 + Restoration obligation last = $ 108900 X42000 + Developmental Conte Total Coste $ 1603,000 Caluage value 121000 1482000 Total estimated Mineral available 57000 tone 15 ler unit Mineral Conte = $1482000/57000 tou $ 26/ton (6) Total Material Cost of December 31, 2020 inventory = Ending Minerals Remened - Mineral sold Tamentory = 28500 ton - 20900 tom - 7600 tons

Value of Material Cost o dec 31, 2016 Ending Inuentory X Per Unit Mineral 7600 tone X 126 Cost $ 197600 d Total Material Cart in cost of goods Cold at december 31, 2020- Material Cold & Per unit Mineral Cast Yo 900 X 126 $ 543400 10 15