Enter the total cost, residual value, and total units into the calculator to determine the depletion cost per unit. This calculator helps in accounting for the cost of natural resources over time.
Depletion Cost Per Unit Formula
The following formula is used to calculate the depletion cost per unit.
DCPU = (TC - RV) / TU
Variables:
- DCPU is the depletion cost per unit (dollars per unit)
- TC is the total cost of the resource (dollars)
- RV is the residual value of the resource after it is fully depleted (dollars)
- TU is the total number of units of the resource
To calculate the depletion cost per unit, subtract the residual value from the total cost and divide the result by the total number of units of the resource.
What is Depletion Cost Per Unit?
Depletion cost per unit is an accounting term used to allocate the cost of natural resources over the period they are consumed. It is a measure of the cost associated with the extraction of minerals, oil, natural gas, or other non-renewable resources from the earth. This cost reflects the usage of the resource and helps in accurately reporting the expense and value of the resource on financial statements.
How to Calculate Depletion Cost Per Unit?
The following steps outline how to calculate the Depletion Cost Per Unit.
- First, determine the total cost of the resource (TC) in dollars.
- Next, determine the residual value of the resource after it is fully depleted (RV) in dollars.
- Next, determine the total number of units of the resource (TU).
- Next, gather the formula from above = DCPU = (TC – RV) / TU.
- Finally, calculate the Depletion Cost Per Unit (DCPU) in dollars per unit.
- After inserting the variables and calculating the result, check your answer with the calculator above.
Example Problem :
Use the following variables as an example problem to test your knowledge.
Total cost of the resource (TC) = $100,000
Residual value of the resource (RV) = $10,000
Total number of units of the resource (TU) = 50,000 units
