The answer and formula is below can someone show how each calculation was found?
ID: 2429890 • Letter: T
Question
The answer and formula is below can someone show how each calculation was found?
Landmark Coal operates a mine. During July, the company obtained 500 tons of ore, which yielded 250 pounds of gold and 63,400 pounds of copper. The joint cost related to the operation was $500,000. Gold sells for $325 per ounce and copper sells for $0.89 per pound. Allocate the joint costs using the relative sales values. With these costs, what is the profit or loss associated with Copper?
The correct answer is (35,626.49)
The formula is below....
Copper Sales Value = Copper Weight * Selling Price
Plus
Gold Sales Value = 250 lb * 16 * $325
Equals Total Sales Value
Copper sales value / total sales value = %
Revenue Copper = Copper Weight * Selling Price
Minus
Cost Copper = Sales Value % * 500,000
Equals Profit or Loss
Explanation / Answer
Solution:
Copper sales value = Copper weight * Selling price = 63400 * $0.89 = $56,426
Gold Sales value = Gold in ounces * Selling price
1 pount = 16 ounces
Gold sales value = 250 * 16 * $325 = $1,300,000
Total sale value of gold and copper = $1,300,000 + $56,426 = $1,356,426
Joint cost = $500,000
Joint cost allocation to copper = $500,000 * $56,426 / $1,356,426 = $20,799.51
Profit or loss associated with Copper = Sales value - Allocated cost
= $56,426 - $20,799.51 = $35,626.49
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