Depletion Cost Per Unit Calculator

Formula

The formula to calculate the Depletion Cost Per Unit (DCPU) is:

\[ DCPU = \frac{TC - RV}{TU} \]

Where:

$ 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

Depletion Cost Per Unit (DCPU): 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.
Total Cost of the Resource (TC): The total cost incurred to acquire and develop the resource.
Residual Value of the Resource (RV): The estimated value of the resource after it is fully depleted.
Total Number of Units of the Resource (TU): The total quantity of the resource available for extraction.

Let's say the total cost of the resource is $1,000,000, the residual value is $100,000, and the total number of units is 500,000. Using the formula:

\[ DCPU = \frac{1,000,000 - 100,000}{500,000} \]

We get:

\[ DCPU = 1.80 \text{ dollars per unit} \]

So, the depletion cost per unit is $1.80 per unit.