Suppose that Sea Shell Oil Company (SS) is pumping oil at a field off the coast of Nigeria. At this site, it has an extraction cost of $30per barrel for the first 5 million barrels it pumps each year and then $60 per barrel for all subsequent barrels that it pumps each year,up to the site's maximum capacity of 90 million barrels per year.Instructions: Enter your answers as a whole number. In part b, round your answers for accounting and economic profit to 1 decimalplace.a. Suppose the user cost is $60 per barrel for all barrels and that the current market price for oil is $105 per barrel. How many barrelswill SS pump this year?million barrelsWhat is the total accounting profit on the total amount of oil it pumps?$millionWhat is the total economic profit on those barrels of oil?$millionb. What will happen if the current market price for oil rises to $135 per barrel, while the user cost remains at $60 per barrel? How manybarrels will SS pump?million barrelsWhat will be its accounting profit?$billionWhat will be its economic profit?billion%24 c. If the current market price remains at $135 per barrel but the user cost rises to $110 per barrel, how many barrels will SS pump thisyear?barrelsWhat will be its accounting profit?What will be its economic profit?%24

Suppose that Sea Shell Oil Company (SS) is pumping oil at a field off the coast of Nigeria. At this site, it has an extraction cost of $30 per barrel for the first 5 million barrels it pumps each year and then $60 per barrel for all subsequent barrels that it pumps each year, up to the site's maximum capacity of 90 million barrels per year.

Suppose that Sea Shell Oil Company (SS) is pumping oil at a field off the coast of Nigeria. At this site, it has an extraction cost of $30 per barrel for the first 5 million barrels it pumps each year and then $60 per barrel for all subsequent barrels that it pumps each year, up to the site's maximum capacity of 90 million barrels per year.

FINANCIAL ACCOUNTING

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ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

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Question

100%

Suppose that Sea Shell Oil Company (SS) is pumping oil at a field off the coast of Nigeria. At this site, it has an extraction cost of $30
per barrel for the first 5 million barrels it pumps each year and then $60 per barrel for all subsequent barrels that it pumps each year,
up to the site's maximum capacity of 90 million barrels per year.
Instructions: Enter your answers as a whole number. In part b, round your answers for accounting and economic profit to 1 decimal
place.
a. Suppose the user cost is $60 per barrel for all barrels and that the current market price for oil is $105 per barrel. How many barrels
will SS pump this year?
million barrels
What is the total accounting profit on the total amount of oil it pumps?
$
million
What is the total economic profit on those barrels of oil?
$
million
b. What will happen if the current market price for oil rises to $135 per barrel, while the user cost remains at $60 per barrel? How many
barrels will SS pump?
million barrels
What will be its accounting profit?
$
billion
What will be its economic profit?
billion
%24

c. If the current market price remains at $135 per barrel but the user cost rises to $110 per barrel, how many barrels will SS pump this
year?
barrels
What will be its accounting profit?
What will be its economic profit?
%24

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