Reference no: EM133180169

Question - Jed Clampet of Beverly Hills purchased land for $10,800,000 that contains an estimated 500,0000 barrels of oil. After the oil is completely pumped from the land, it is expected that the land would be worth $800,000. Drilling and Pumping Equipment costing $250,000 was purchased, and because of the extremely heavy wear and tear on the equipment, it is expected that there will be no salvage value when the oil drilling and pumping is completed. During the first year, 150,000 barrels of oil were pumped and $120,000 was spent for labor and other operating costs. Compute the total cost per barrel of oil pumped from the ground in the first year.