Question 4

Okapi Mine extracts three (3) kinds of products (Coal, Limestone, and gemstones) in one production process and this results in joint costs of BWP159,000. Okapi Mine has an option of selling the stones as they are, or they can be process them before selling. As the cost accountant, you have been provided with the following information:

Product	Volume	Sales Price at Split -off	Further Processing Costs	Sales Price after Further Processing
	Tones	$	$	$
Coal	6,000	25.00	83,000	37.00
Limestone	5,000	40.00	58,000	55.00
Gemstones	8,000	55.00	25,000	60.00

Required:

Identify which product Okapi Mine should sell at split off point and which ones should be processed further if all processing costs vary with the level of output. Give reasons for your answer. [10 marks]