Tolan Resources Company Acquired a Tract of Land Containing an Extractable

question 13

Multiple Choice

Tolan Resources Company acquired a tract of land containing an extractable natural resource.Tolan is required by its purchase contract to restore the land to a condition suitable for recreational use after it has extracted the natural resource.Geological surveys estimate that the recoverable reserves will be 2,000,000 tons, and that the land will have a value of $1,200,000 after restoration.Relevant cost information follows: $\begin{array}{lr}\text { Land } & \$ 9,000,000 \\\text { Estimated restoration costs } & 1,800,000\end{array}$ If Tolan maintains no inventories of extracted material, what should be the charge to depletion expense per ton of extracted material?

• A)$3.90
• B)$4.50
• C)$4.80
• D)$5.40

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Definitions:

Sales Response Function

Relates the expense of the marketing effort to the marketing results obtained.

U-shaped

Refers to a pattern or layout that resembles the letter “U,” often used to describe the configuration of tables, desks, or other arrangements.

S-shaped

A term often used to describe a curve or growth pattern that starts slowly, accelerates, and then slows down again, resembling the letter "S."

Kaizen

A Japanese business philosophy of continuous improvement of working practices, personal efficiency, etc.