Depletion
Response to the following problem:
The Feller Company purchased a site for a limestone quarry for $100,000 on January 2, 2010. It estimates that the quarry will yield 400,000 tons of limestone. It estimates that its retirement obligation has a fair value of $20,000, after which the land could be sold for $10,000. In 2010, 80,000 tons were quarried and 60,000 tons sold. Costs of production (excluding depletion) are $4 per ton.
Required
1. Compute the depletion cost per ton.
2. Compute the total cost of the inventory at December 31, 2010.
3. Compute the total cost of goods sold for 2010.