As an Accountant for Metals Unlimited, a Small Mining Firm

question 122

Essay

As an accountant for Metals Unlimited, a small mining firm, you are responsible for allocating the joint costs for the minerals. The firm is using the weight of the material to allocate these costs. Some of the tailings from the mining process are currently being sold as unprocessed gravel to landscape material distributors, but the allocated costs are greater than the revenue. Therefore, several managers would like to quit selling this product.
a)What joint product allocation method is Metals Unlimited using? Why, under this method, are the joint cost allocations to gravel larger than the revenues?
b)List two market-based methods that could be used to allocate the joint costs. List one pro and one con of each method for this organization.
c)Write a brief paragraph to the managers explaining why they should not use any allocated joint costs in their decisions about whether to keep or drop the gravel product.

---

Definitions:

Vestibule

An entrance or enclosed antechamber between the outside and the interior of a building, or a space or cavity at the beginning of a canal, like those of the nose or ear.

Vertigo

A sensation of spinning or dizziness, often caused by issues with the inner ear or the vestibular nerve.

Tinnitus

The hearing of sound when no external sound is present, often ringing in the ears.

Tympanitis

Inflammation of the ear drum, also known as tympanic membrane, leading to pain and possible infection.