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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 $40,000 after incurring additional processing costs of $12,000. The copper is sold for $80,000 after additional processing costs of $10,000, and the manganese yield sells for $60,000 but requires additional processing costs of $18,000. The joint costs of processing the raw ore, including the cost of mining, are $100,000 per batch. Required: Use the estimated net realizable value method to allocate the joint processing costs. Lead Copper Manganese Approximate sales value at split-off Percent of total sales values at split-off % % Cost allocation

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 $40,000 after incurring additional processing costs of $12,000. The copper is sold for $80,000 after additional processing costs of $10,000, and the manganese yield sells for $60,000 but requires additional processing costs of $18,000. The joint costs of processing the raw ore, including the cost of mining, are $100,000 per batch. Required: Use the estimated net realizable value method to allocate the joint processing costs. Lead Copper Manganese Approximate sales value at split-off Percent of total sales values at split-off % % Cost allocation

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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**Blasto, Inc. Mining Operations Cost Analysis** 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 $40,000 after incurring additional processing costs of $12,000. The copper is sold for $80,000 after additional processing costs of $10,000, and the manganese yield sells for $60,000 but requires additional processing costs of $18,000. The joint costs of processing the raw ore, including the cost of mining, are $100,000 per batch. **Required:** Use the estimated net realizable value method to allocate the joint processing costs. **Data Table:** | | **Lead** | **Copper** | **Manganese** | |------------------|----------|------------|---------------| | Approximate sales value at split-off | | | | | Percent of total sales values at split-off | | | | | Cost allocation | | | | **Instructions:** 1. **Approximate Sales Value at Split-Off:** - Calculate by subtracting the additional processing costs from the sales value for each product. - Lead: $40,000 - $12,000 - Copper: $80,000 - $10,000 - Manganese: $60,000 - $18,000 2. **Percent of Total Sales Values at Split-Off:** - Determine the percentage of total sales value each product represents. 3. **Cost Allocation:** - Allocate the $100,000 joint processing cost based on each product’s percentage of total sales value. This exercise aids in understanding cost allocation using the estimated net realizable value method in a mining operation context.
Transcribed Image Text:**Blasto, Inc. Mining Operations Cost Analysis** 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 $40,000 after incurring additional processing costs of $12,000. The copper is sold for $80,000 after additional processing costs of $10,000, and the manganese yield sells for $60,000 but requires additional processing costs of $18,000. The joint costs of processing the raw ore, including the cost of mining, are $100,000 per batch. **Required:** Use the estimated net realizable value method to allocate the joint processing costs. **Data Table:** | | **Lead** | **Copper** | **Manganese** | |------------------|----------|------------|---------------| | Approximate sales value at split-off | | | | | Percent of total sales values at split-off | | | | | Cost allocation | | | | **Instructions:** 1. **Approximate Sales Value at Split-Off:** - Calculate by subtracting the additional processing costs from the sales value for each product. - Lead: $40,000 - $12,000 - Copper: $80,000 - $10,000 - Manganese: $60,000 - $18,000 2. **Percent of Total Sales Values at Split-Off:** - Determine the percentage of total sales value each product represents. 3. **Cost Allocation:** - Allocate the $100,000 joint processing cost based on each product’s percentage of total sales value. This exercise aids in understanding cost allocation using the estimated net realizable value method in a mining operation context.
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