Sunoco, Inc. and Subsidiaries - Page 5

                                        - 5 -                                         
                  Cordero employed trucks and shovels at the Gillette                 
             mine to remove the overburden and to strip mine the exposed              
             coal.  The expenses that Cordero incurred in removing                    
             overburden and extracting coal at the Gillette mine                      
             included the salaries and wages paid to employees who                    
             operated the equipment, depreciation on and repairs to the               
             equipment, fuel for the equipment, utilities, and employee               
                  Cordero quantified its overburden removal costs at                  
             the Gillette mine using a volumetric ratio method.  Cordero              
             first determined the volume of overburden that was removed               
             during the year, and it computed the ratio of that amount                
             to the sum of the volumes of overburden removed and coal                 
             extracted.  Cordero then multiplied the ratio by the total               
             of each category of expense incurred in the process of                   
             removing overburden and extracting coal (viz, wages and                  
             benefits, fuel, utilities, depreciation, and repairs).  The              
             product of each of these multiplications was deemed to be                
             the portion of each expense category that was attributable               
             to the overburden removed during the year.  Using this                   
             method, Cordero computed its aggregate overburden removal                
             costs at the Gillette mine for the years in issue.  These                
             aggregate amounts are as follows:                                        

Page:  Previous  1  2  3  4  5  6  7  8  9  10  11  12  13  14  15  16  17  18  19  20  Next

Last modified: May 25, 2011