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 $74,000 after incurring additional processing costs of $20,000. The copper is sold for $127,000 after additional processing costs of $14,500, and the manganese yield sells for $77,000 but requires additional processing costs of $18,500. The joint costs of processing the raw ore, including the cost of mining, are $275,000 per batch.

Required:

Use the estimated net realizable value method to allocate the joint processing costs. (Do not round intermediate calculations.)

	Lead Copper Manganese Approximate sales value at split-off Percent of total sales values at split-off % % % Cost allocation

Thank you

Answer 1

ANSWER:

Allocation of joint costs under net realisable value method

	Lead	Copper	Manganese	Total
Sales value	74000	127000	77000	278000
Less: additional costs	(20000)	(14500)	(18500)	53000
Net realisable value	54000	112500	58500	225000
Percent of total sales values at split-off	24%	50%	26%	100%
Cost allocation	66000	137500	71500	275000