Big Oil Company acquired an interest in a lease by paying a lease bonus of $80,000. Big Oil drilled a productive well and deducted the IDC. An engineering report on January 1 estimated the reserves at 30,000 barrels of oil. During the year, 1,000 barrels of oil were produced and sold for $70,000. Big Oils expenses for the production of the oil were $32,000. What is Big Oils allowable depletion?

• $10,500
• $12,000
• $38,000
• $2,667