During 2014, a Company Purchased a Mine at a Cost

question 83

Multiple Choice

During 2014, a company purchased a mine at a cost of $3,000,000. The company spent an additional $600,000 getting the mine ready for its intended use. It is estimated that 300,000 tons of mineral can be removed from the mine and the residual value of the mine will be $600,000. During 2014, 45,000 tons of mineral were removed from the mine and 35,000 tons were sold. Which of the following statements is correct with respect to the accounting for the mine?

• A) The 2014 net income decreased $450,000 as a result of the mining during the year.
• B) The book value of the mine decreased $350,000 during 2014.
• C)The inventory of minerals was $450,000 at December 31, 2014.
• D)The 2014 cost of goods sold was $350,000.

Ascertain the total number of units produced over a period.

Understand the components and calculations involved in preparing budgeted selling and administrative expenses.

Analyze the relationship between budgeted sales, production, and cash disbursements.

Calculate predetermined overhead rates and understand their application in budgeting.

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Definitions:

Marketing Mix

A combination of factors that can be controlled by a company to influence consumers to purchase its products, often summarized as product, price, place, and promotion.

Four Ps

The marketing mix framework consisting of Product, Price, Place, and Promotion, used by businesses to market their products effectively.

Profitability

A financial metric indicating the extent to which a company or a business generates profit compared to its revenue and expenses.

Marketing Mix

Refers to the set of actions, or tactics, that a company uses to promote its brand or product in the market. It typically includes four Ps: Product, Price, Place, and Promotion.