Determine the depletion cost per board foot, Cost Accounting

Assignment Help:

Conan O'Brien Logging and Lumber Company owns 3,300 acres of timberland on the north side of Mount Leno, which was purchased in 2000 at a cost of $650 per acre. In 2012, O'Brien began selectively logging this timber tract. In May of 2012, Mount Leno erupted, burying the timberland of O'Brien under a foot of ash. All of the timber on the O'Brien tract was downed. In addition, the logging roads, built at a cost of $159,000, were destroyed, as well as the logging equipment, with a net book value of $330,300.

At the time of the eruption, O'Brien had logged 20% of the estimated 540,000 board feet of timber. Prior to the eruption, O'Brien estimated the land to have a value of $300 per acre after the timber was harvested. O'Brien includes the logging roads in the depletion base.

O'Brien estimates it will take 3 years to salvage the downed timber at a cost of $712,800. The timber can be sold for pulp wood at an estimated price of $2 per board foot. The value of the land is unknown, but must be considered nominal due to future uncertainties.

(a) Determine the depletion cost per board foot for the timber harvested prior to the eruption of Mount Leno. (Round per unit answer to 2 decimal places, e.g. 0.45.)

 


Related Discussions:- Determine the depletion cost per board foot

Test accounting of monetary instruments, This question tested the accountin...

This question tested the accounting of monetary instruments, especially an asset held at reasonable value through loss or profit. The preparation of the journal for subsequent and

Cost-plus pricing, Computation of mark up and Target selling price in cost-...

Computation of mark up and Target selling price in cost-minus pricin

Funds from operations, Consider as Illustration. Profit and loss account of...

Consider as Illustration. Profit and loss account of TIL demonstrates, that, operations have given gross addition of Rs. 360 million to funds throughout the period. These funds sho

Critical thinking about cvp, The Critical Thinking about CVP is described b...

The Critical Thinking about CVP is described below CVP is more than just a mathematical tool/device to calculate values such as the break-even point. It can be used for the cri

Calculate the cash value financing interest rate , Calculate the today's ca...

Calculate the today's cash value of a car that can be leased with $5000 down, bi-weekly payments of $199 over 4 years and a buy-back value of $15,000 at the end of the lease if the

Calculate the reduction in failure costs per unit, Each unit of a product r...

Each unit of a product requires four components. The average number of components is 4.25 due to component failure. Purchasing higher quality components can reduce the average numb

Mr., behabioural aspect of standard costing on budget

behabioural aspect of standard costing on budget

Approach in cost accounting, Approach in Cost Accounting Cost accounti...

Approach in Cost Accounting Cost accounting is based on the framework or concept of cost centers that is all the costs incurred throughout the production process contain to be

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd