3. 12.36 For the last 10 years, Am-Mex Coal has used the cost depletion factor of $2500 per 100 tons to write off the investment of $35 million in its Pennsylvania anthracite coal mine. Depletion thus far totals $24.8 million. A new study to appraise mine reserves indicates that no more than 800,000 tons of salable coal remains. If estimated gross income is expected to be $8.50 million on a production level of 72,000 tons, determine next year’s

(a) cost, and

(b) percentage depletion amounts. The percentage depletion allowance is 10%.