The platinum Touch Mining Company paid $4,000,000 for a parcel of land, including he mining rights, in addition, the company spent $564,700 to prepare the site for mining operations.
When mining is completed, it is estimated that the residual value of the asset will be $800,000.
Scientists estimate that the site contains 15,000 ounces of platinum.
a. What is the average depletion cost per ounce?
b. If 1,220 ounces were mined in the first year of operation, what is the amount of the depletion cost?