Question
Artistic Stone produces memorial monuments and architectural slabs. The company excavates blocks of granite from its joint processes of Quarry and Cutting. Two joint products
Artistic Stone produces memorial monuments and architectural slabs. The company excavates blocks of granite from its joint processes of Quarry and Cutting. Two joint products (memorial monuments and architectural slabs) are produced from the process. There is also a by-product generated, which is called grit.
Memorial monuments are processed in a variety of standard shapes, sizes, and patterns and sold to funeral homes. Architectural slabs are cut and polished to specifications from special-order for contractors of office buildings. The small pieces of granite resulting from the cutting process are crushed and sold to a farm as poultry grit at $40 per ton.
Below is the information provided by Artistic Stone:
Process | Cost | Tons of Output |
Quarry
| 350,000 | 100,000 |
Cutting | 250,000 | 90,000 |
Monuments | 300,000 | 25,000 |
Slabs | 400,000 | 60,000 |
Grit | 10,000 | 5,000 |
Quarry and Cutting are joint processes. Assume that the company uses the physical unit method to allocate joint costs.
Required: Compute the cost per ton of monuments and slabs under the following condition:
1. The grit is accounted for as Other Income
2. The grit is accounted for as by-product revenue deducted from the main product cost.
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