Answer:
Net Income = $4,560,000
Explanation:
Monroe Minerals Company
Income Statement
For the year ended, December 31, 20Y1
Revenues:
Sales revenues (6,000 tons of copper × $4,500) = $27,000,000
Operating Expenses:
Operating expenses $8,040,000
Depreciation expenses (Note 1) <u> $14,400,000 </u>
Total operating expenses <u> 22,440,000</u>
Net operating income $4,560,000
<em>Note 1</em>
Depreciation expense rate =
Cost of equipment ÷ expected unit production
or, Depreciation expense rate = $120,000,000 ÷ 50,000 tons of copper
or, Depreciation expense rate = $2,400/ton
Therefore, depreciation expense for the year 1 = $2,400 × 6,000 = $14,400,000.
