Question

Bridgeport Mining Company purchased land on February 1, 2020, at a cost of $828,100. It estimated that a total of 51,000 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 $90,900. It believes it will be able to sell the property afterwards for $101,000. It incurred developmental costs of $202,000 before it was able to do any mining. In 2020, resources removed totaled 25,500 tons. The company sold 18,700 tons. Compute the following information for 2020. (a) Per unit mineral cost $enter a dollar amount

(b) Total material cost of December 31, 2020, inventory $enter a dollar amount

(c) Total material cost in cost of goods sold at December 31, 2020 $enter a dollar amount

Answer 1

Bridgeport Mining Company
	Total cost
	Purchase price of land	$       8,28,100.00
	Fair value of restoration	$           90,900.00
	Selling value of property	$      -1,01,000.00
	Development cost	$       2,02,000.00
	Total cost=(A)	$     10,20,000.00
	Total tons of material available for mining=(B)	51000
a)	Per unit of material cost=Total cost/Total tons of material available for mining=(A)/(B)	$                   20.00
b)	Total material cost of Inventory December 31st,2020
	In 2020 resources removed total	25500	tons
	Less: Total tons sold	-18700	tons
	Inventory	6800	tons
	Total material cost of Inventory =Inventory*per unit of material cost=(6800*$20)	$       1,36,000.00
c)	Cost of goods sold=(Units sold*per unit of material cost)=(18700*$20)	$       3,74,000.00