Question

Locations Cost of land Cost of equipment Cost of mining and reclamation Time taken to mine the area 1 $100,000 $10,000 $5,000 per day 30 days 2 $35,000 $6,000 $4,500 per day 45 days 3 $30,000 $7,500 $3,500 per day 120 days 4 $40,500 $8,000 $7,000 per day 65 days Considering all costs, which location will cost the least to the company to mine?

Answer 1

Answer:

Location 2 will cost the least to the company to mine.

Explanation:

a) Data and Calculations:

Locations  Cost of land     Cost of       Cost of mining      Time taken to

                                        equipment   and reclamation    mine the area

1                 $100,000      $10,000         $5,000 per day        30 days

2                 $35,000       $6,000          $4,500 per day        45 days

3                 $30,000       $7,500          $3,500 per day       120 days

4                 $40,500       $8,000          $7,000 per day        65 days

Locations  Cost of land     Cost of       Cost of mining                      Total

                                        equipment   and reclamation                    Costs

1                 $100,000      $10,000         $150,000 ($5,000 * 30)  $260,000

2                 $35,000       $6,000         $202,500 ($4,500 * 45)   $243,500

3                 $30,000       $7,500         $420,000 ($3,500 * 120)  $457,500

4                 $40,500       $8,000         $445,000 ($7,000 * 65)   $503,500