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

Answer 1

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