Question

Landmark Coal operates a mine. During July, the company obtained 500 tons of ore, which yielded 250 pounds of gold and 63,100 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?

Answer 1

Solution :-

Total sales value = Copper sales Value + Gold Sales value
Copper sales value = Copper weight * selling price
Gold sales value = 250 pounds * 16*$325 = $1,300,000
Revenue from copper = Copper weight -* selling price
=$63,100 * .89		=$56,159
Cost of copper = sales value% * $500,000
=$56,159/($56,159 + $1,300,000) * $500,000				=$20,553.61
Profit = $56,159 - $20,553.61			= $35,605.39
So the profit associated with copper is = $35,605.39

* 1 Pound = 16 Ounces