Alternative methods of joint cost allocation, product-mix decisions. The Sunshine Oil @

Company buys crude vegetable oil. Refining this oil results in four products at the splitoff 5. joint costs allocated to, point: A, B, C, and D. Product C is fully processed by the splitoff point. Products A, B, and D $75,000 can individually be further refined into Super A, Super B, and Super D. In the most recent month (December), the output at the splitoff point was:

‘The joint costs of purchasing and processing the crude vegetable oil were $100,000. Sunshine had no beginning or ending inventories. Sales of product C in December were $50,000.
Products A, B, and D were further refined and then sold. Data related to December are:

REQUIRED 1. Compute the gross margin percentage for each product sold in December, using the following methods for allocating the $100,000 joint costs:

a. Sales value at splitoff

b. Physical-measure

c. NRV 2. Could Sunshine have increased its December operating income by making different decisions about the further processing of products A, B, or D? Show the effect on operating income of any changes you recommend.LO1

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Product A, 300,000 litres Product B, 100,000 litres Product C, 50,000 litres Product D, 50,000 litres