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Leno4ka [110]
2 years ago
6

39) Fortune Drilling Company acquires a mineral deposit at a cost of $5,900,000. It incurs additional costs of $600,000 to acces

s the deposit, which is estimated to contain 2,000,000 tons and is expected to take 5 years to extract. What journal entry would be needed to record the expense for the first year assuming 418,000 tons were mined
Business
1 answer:
Artist 52 [7]2 years ago
6 0

Answer:

Debit : Depletion Expense $1,358,500

Credit : Accumulated Depletion Expense $1,358,500

Explanation:

Step 1 : Determine the Total Cost of the Mineral Deposit

Total Cost of the Mineral Deposit include the Purchase costs plus any costs incurred directly to acquire an put the mineral deposit in operation as intended by management.

Total Cost of the Mineral Deposit = $5,900,000 + $600,000

                                                        =  $6,500,000

Step 2 : Find the depletion rate

Depletion rate = Total Cost of Mineral deposit ÷ Expected tones to be extracted

                        = $6,500,000 ÷ 2,000,000

                        = $3.25 per tone

Step 3 : Find the expense for the period

Expense for the period = Depletion rate x amount extracted during the period

                                      = $3.25 x 418,000 tons

                                      = $1,358,500

Step 4 : Journalize

Debit : Depletion Expense $1,358,500

Credit : Accumulated Depletion Expense $1,358,500

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ArbitrLikvidat [17]

Answer:

a. On average, the number of boards they have on order  = 1,056 boards.

b. On average, the number of boards they have =560 boards.

c. Total holding cost per week = $140.

d. Holding cost incurred per board = $ 0.25.

Explanation:

In the question, the details given are:

Service level =96 %

Lead time =3 weeks

Weekly demand =150

Standard deviation=200

This is a case of variable demand and constant lead time

a. Reorder point =Demand during lead time +Safety stock

=Average weekly demand*lead time+z*sqrt(lead time)*standard deviation of weekly demand

=150*3+NORMSINV(0.99)*sqrt(3)*200

=450+1.7507*sqrt(3)*200

=450+606.46=1,056.46

=1,056 (nearest whole number).

On average, the number of boards they have on order  = 1,056 boards.

b. For a normal distribution,

z=x-mean/std deviation

z-value for a 96% confidence level = 2.05

2.05=x-150/200

x = 150+2.05*200=560

On average, the number of boards they have =560 boards.

c.Total holding cost per week=Average inventory *holding cost per week=560/2 *0.5=280*0.5 =$140

d.Holding cost incurred per board =Total holding cost /Number of boards =140/560 = $ 0.25.

5 0
3 years ago
The production possibility frontier is used to illustrate the concept of A) the laissez-faire economy. B) opportunity costs. C)
julia-pushkina [17]

Answer:

B) opportunity costs.

Explanation:

The production possibility frontier is used to illustrate the concept of <u>opportunity costs</u>. The production possibility frontier shows the combination of goods which can be produced by making use of all the available resources in an economy. In order to produce an extra unit of one good, some amount of other good has to be sacrificed. This is known as opportunity cost.

6 0
2 years ago
The owner of Marshall Restaurant is disappointed because the restaurant has been averaging 7,500 pizza sales per month, but the
Troyanec [42]

Answer:

No of units                6,000            7,500       10,000  

Total fixed cost              $12,000.00   $12,000.00   $12,000.00  

Total variable cost         $9,000.00     $11,250.00   $15,000.00  

Total cost                 $21,000.00   $23,250.00   $27,000.00  

Fixed cost per pizza  $2.00                $1.60   $1.20  

Variable cost per pizza  $1.50                 $1.50   $1.50  

Average cost per pizza  $3.50                $3.10   $2.70  

3 0
3 years ago
An investment project has annual cash inflows of $4,200, $5,100, $6,300, and $5,500, and a discount rate of 15 percent. a. What
Naddika [18.5K]

Answer:

It will take 1 year and 307 days to cover the initial investment.

Explanation:

Giving the following information:

Initial investment= $6,900

Cash flows:

Cf1= $4,200

Cf2= $5,100

Cf3= $6,300

Cf4= $5,500

Discount rate= 15%

<u>The payback period is the time required to cover the initial investment. We need to discount each cash flow.</u>

<u></u>

Year 1= 4,200/1.15 - 6,900= -3,247.83

Year 2= 5,100/1.15^2 - 3,247.83= 608.50

<u>To be more accurate:</u>

(3,247.83 / 3,856.33)*365= 307 days

It will take 1 year and 307 days to cover the initial investment.

6 0
3 years ago
Deadweight loss is A. the reduction in consumer expenditure resulting from market failure. B. the reduction in economic surplus
never [62]

Answer:

The answer is: B) The reduction in economic surplus resulting from a market not being in competitive equilibrium.

Explanation:

Deadweight loss is an economic cost to society as a whole when market inefficiencies occur preventing it from reaching its equilibrium point. Market inefficiencies are caused by incorrect allocation of resources.

For example if a price ceiling is established, suppliers will tend to lower the quantity supplied while the quantity demanded either increases or stays the same. That economic deficiency resulting from an unsatisfied demand is what we call deadweight loss.

Other causes for deadweight loss are price floors (reduction of the quantity demanded) and taxation (shifts on the demand or supply curves).

5 0
3 years ago
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