Navajo Mining Company Purchased a Mine in 2013 for $3,400,000

question 47

Multiple Choice

Navajo Mining Company purchased a mine in 2013 for $3,400,000.It was estimated that the mine contained 200,000 tons of ore and that the mine would be worthless after all of the ore was extracted.The company extracted 25,000 tons of ore in 2013 and 30,000 tons of ore in 2014. What is depletion expense for 2014?

• A) $425,000
• B) $680,000
• C) $340,000
• D) $510,000

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Definitions:

Cost of Goods Sold

The direct costs attributable to the production of the goods sold by a company, including the cost of materials and labor.

Raw Material Purchases

The acquisition of the basic inputs or resources that are converted through manufacturing processes into final products.

Factory Overhead

Costs related to the operation of a manufacturing plant which cannot be directly associated with specific units of production, such as utilities, maintenance, and management salaries.

Property Taxes

Property Taxes are levies imposed by local governments on real estate based on the property's value, used to fund public services and infrastructure.