The following data relate to the Denver Company s operations for the year ended

Cost of goods manufactured= $490,000

Explanation:

Giving the following information:

Overhead:

Indirect material usage 10,000

Indirect labor 10,000

Factory water and electricity 20,000

Depreciation-factory 50,000

Total overhead= 90,000

To calculate the cost of goods manufactured, we need to use the following formula:

cost of goods manufactured= beginning WIP + direct materials + direct labor + allocated manufacturing overhead - Ending WIP

Direct materials= 100,000 + 20,000 - 30,000= 90,000

cost of goods manufactured= 60,000 + 90,000 + 300,000 + 90,000 - 50,000

cost of goods manufactured= $490,000

60.4%

Explanation:

Initial cost = $240,000

profit of first year = $65,000

this is reduced subsequently until it reaches zero

Note that this value reduces in an arithmetic progression from $65,000 , $60,000, ... , 0

the first term A1 = 65,000

the common difference d is 60,000 - 65,000 = -5000

the last term is An = 0

we calculate for number of terms

An = A1 +  (n - 1)d

0 = 65,000 + (n - 1)(-5000)

0 = 65,000 - 5000n +5000

5000n = 70,000

n = 14

using the equation for summation of terms in an arithmetic progression Sn, we solve as

Sn = [2A1 + (n - 1)d]

Sn = [2(60,000) + (14 - 1)(-5000)]

Sn = 7[120,000 - 65,000]

Sn = 7 x 55,000

Sn = $385,000.  This is the total profit on the mine

rate of return = (385,000 - 240,000)/240,000 = 145,000/240,000 = 0.604

i.e 60.4%