MA36 Problem: Joint Costing and Byproducts – Copper Co.

MA36 Problem: Joint Costing and Byproducts – Copper Co.

Copper Company mines one mineral, which is processed into three separate products, X, Y, andZ. Joint costs are $1,800,000. To complete X and Y, further processing is required at costs of $1,900,000 and $2,480,000 respectively. Product Z does not required further processing. Thefollowing production and sales information is available for the current year:TonnesStartedTonnesCompletedTonnesSoldSelling Priceafter processingX 10,000 10,000 10,000 $1,190/tonY 12,000 12,000 8,000 $1,540/tonZ 28,000 28,000 21,000 $1,170/tonThere is not any shrinkage during any part of the manufacturing process.Required:1. Allocate the joint costs under the following methods:a) Physical measure method (assume that the input is on a tonne basis and that for every one tonne started, the input is one tonne of raw material) b) Sale Value (assume selling price per ton at split off is: $595 for X, $462 for Y and$1,170 for Z)c) Net Realizable Value2. Assume that there is a byproduct from production, which can be sold for a nominalamount. One thousand tonnes of this byproduct was produced, and it can be sold for $30 per tonne. There are not any separable costs associated with this byproduct. Eighthundred tonnes were sold during the year. Explain the methods of accounting for this byproduct.