Sands Company Purchased Mining Rights for $500,000

question 108

Multiple Choice

Sands Company purchased mining rights for $500,000. They expect to harvest 1 million tons of ore over the next five years. During the current year, Sands mined 350,000 tons of ore. The entry to record the depletion would include

• A) a debit to Depletion Expense for $175,000
• B) a credit to Depletion Expense for $350,000
• C) a debit to Accumulated Depletion for $175,000
• D) a credit to Accumulated Depletion for $350,000

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Definitions:

Scale of Production

Refers to the size of the operation or the volume of output produced by a business or manufacturing plant.

Average Total Cost

Average Total Cost is the total cost of production divided by the total quantity produced, representing the per unit cost of production.

Returns to Scale

The change in output as a result of proportionately changing all inputs in the production process.

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The process through which students register or enter into a course of study at educational institutions.