Alcide Mining Company purchased land on February 1, 2017, at a cost of $1,190,000. It estimated that a total of 60,000 tons of mineral was available for mining. After it has removed all the naturalresources, the company will be required to restore the property to its previous state because of strict environmental protection laws. It estimates the fair value of this restoration obligation at $90,000. It believes it will be able to sell the property afterwards for $100,000. It incurred developmental costs of $200,000 before it was able to doany mining. In 2017, resources removed totaled 30,000 tons. The company sold 22,000 tons. InstructionsCompute the following information for 2017.(a) Per unit material cost.(b) Total material cost of December 31, 2017, inventory (c) Total material cost in cost of goods sold at December 31,

(a) Per unit material cost.

total cost of the mine = $1,190,000 (purchase cost) + $90,000 (restoration costs) + $200,000 (development costs) - $100,000 (salvage value) = $1,380,000

estimated tons of minerals = 60,000 tons

cost per ton = $1,380,000 / 60,000 tons = $23 per ton

(b) Total material cost of December 31, 2017, inventory

during 2017 extracted 30,000 tons and sold 22,000 tons, so the total inventory = (30,000 tons - 22,000 tons) x $23 per ton = $184,000

(c) Total material cost in cost of goods sold at December 31,

since the company sold 22,000 tons, the COGS = 22,000 tons x $23 per ton = $506,000

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