If a Mining Company Extracts 1,500,000 Tons in a Period

question 275

Multiple Choice

If a mining company extracts 1,500,000 tons in a period but only sells 1,200,000 tons,

• A) total depletion on the mine is based on the 1,200,000 tons.
• B) depletion expense is recognized on the 1,500,000 tons extracted.
• C) depletion expense is recognized on the 1,200,000 tons extracted and sold.
• D) a separate accumulated depletion account is set up to record depletion on the 300,000 tons extracted but not sold.

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Definitions:

Bullwhip Effect

A situation in supply chain management where slight shifts in demand from consumers cause increasingly amplified shifts in demand at the levels of manufacturers, distributors, and wholesalers.

Primary Causes

Fundamental reasons or root causes that directly lead to an event, situation, or outcome, distinct from secondary or tertiary factors.

Remedy

Refers to a treatment, solution, or means of correcting or improving a problem, situation, or condition.

Bullwhip Measure

A metric used to quantify the increase in fluctuation at higher tiers of a supply chain caused by small changes in demand at the consumer end.