Question

1. 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 $0.85 per pound. Allocate the joint costs using the relative sales values. With these costs, what is the profit or loss associated with Copper?

Round to two decimal places.

2.

Infinity Designs, an interior design company, has experienced a drop in business due to an increase in interest rates and a corresponding slowdown in remodeling projects. To stimulate business, the company is considering exhibiting at the Home and Garden Expo. The exhibit will cost the company $12,000 for space. At the show, Infinity Designs will present a slide show on a PC, pass out brochures that are printed previously, (the company printed more than needed), and show its portfolio of previous
jobs.
The company estimates that revenue will increase by $36,000 over the next year as a result of the exhibit. For the previous year, profit was as follows:

		Revenue					$201,000
		Less:
		Design supplies (variable cost)				$16,000
		Salary of Samantha Spade (owner)				80,000
		Salary of Kim Bridesdale (full time employee)				55,000
		Rent				18,000
		Utilities				6,000
		Depreciation of office equipment				3,600
		Printing of advertising materials				700
		Advertising in Middleton Journal				2,500
		Travel expenses other than depreciation of autos (variable cost)				$2,600
		Depreciation of company cars				9,000
Required:
Calculate the impact of the exhibit on company profit.

Round to two decimal places.

Answer 1

1	Gold	Copper
yield in Pound	250	63,400
Sale Price / Pound	5,200	0.85
Sales value in $	13,00,000	53,890	13,53,890
Joint Cost allocated based on Sales value in $	4,80,098.09	19,901.91	5,00,000.00
Note : 1 Pound = 16 Ounces

2	Current year Profitability	Next year Profitability
Revenue	2,01,000.00	2,37,000.00	Revenue to increase by $36,000
Less:
Design supplies (variable cost)	16,000.00	18,865.67	increase cost based on increase in Sales revenue
Salary of Samantha Spade (owner)	80,000.00	80,000.00
Salary of Kim Bridesdale (full time employee)	55,000.00	55,000.00
Rent	18,000.00	30,000.00	Rent of space for exhibiting
Utilities	6,000.00	6,000.00
Depreciation of office equipment	3,600.00	3,600.00
Printing of advertising materials	700.00	700.00	No change as previous printed material can be used
Advertising in Middleton Journal	2,500.00	2,500.00
Travel expenses other than depreciation of autos (variable cost)	2,600.00	3,065.67	increase cost based on increase in Sales revenue
Depreciation of company cars	9,000.00	9,000.00
Total Cost	1,93,400.00	2,08,731.34
Profitability	7,600.00	28,268.66
The Company's profitability wil increase by $20,668.66