Question

Monroe Minerals Company purchased a copper mine for $122,000,000. The mine was expected to produce 50,000 tons of copper over its useful life. During Year 1, the company extracted 6,400 tons of copper. The copper was sold for $4,900 per ton. Assume that the company incurred $8,540,000 in operating expenses during Year 1. Based on this information, how much net income would Monroe report in Year 1?​

Answer 1

Answer:

Your answer is given below:

Explanation:

Depletion cost per ton

= 122,000,000/50,000 tons = 2,440 per ton

Cost of copper sold = 6,400 tons*2,440 = 15,616,000

Sales = 6,400 tons*4,900 = 31,360,000

Net income = Sales - Cost of copper sold - Operating expenses

= 31,360,000 - 15,616,000 - 8,540,000

= $7,204,000