Blasto, Inc., operates several mines. At one, a typical batch of ore run through

Question

Blasto, Inc., operates several mines. At one, a typical batch of ore run through the plant yields three products: lead, copper, and manganese. At the split-off point, the intermediate products cannot be sold without further processing. The lead from a typical batch sells for $135,000 after incurring additional processing costs of $69,000. The copper is sold for $175,000 after additional processing costs of $26,500, and the manganese yield sells for $155,000 but requires additional processing costs of $39,500. The joint costs of processing the raw ore, including the cost of mining, are $290,000 per batch. Required: Use the estimated net realizable value method to allocate the joint processing costs

Explanation / Answer

Statement showing computations Particulars Lead Copper Managnese Yield Amount Sale Revenue         135,000.00         175,000.00         155,000.00 Additional processing costs         (69,000.00)         (26,500.00)         (39,500.00) Net Realisable Value            66,000.00         148,500.00         115,500.00         330,000.00 Allocation of Joint Costs = NRV of product/330,000 * 290,000            58,000.00         130,500.00         101,500.00         290,000.00

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