In 2010, Minneapolis Mining Purchased a Mineral Deposit for $12,000,000

question 195

Essay

In 2010, Minneapolis Mining purchased a mineral deposit for $12,000,000. It is estimated that 15,000,000 tons can be extracted from the mine. Calculate depletion expense during 2010 when 700,000 tons were extracted and sold.

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Definitions:

Cotter Pins

A pin or fastener used to secure two components together, preventing motion or separation after installation.

Indirect Materials

Materials used in the production process that cannot be directly traced to specific finished products.

Direct Materials

The raw materials directly used in the production of goods.

Period Costs

Expenses that are not directly tied to product production, such as sales and administration expenses, and are charged to the period incurred.