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BP plc refines crude oil into gasoline and kerosene. In July 2039, the company incurs joint costs of $25,000,000 for processing 500,000 barrels of crude
BP plc refines crude oil into gasoline and kerosene. In July 2039, the company incurs joint costs of $25,000,000 for processing 500,000 barrels of crude oil.
Requirements:
- Allocate joint costs using the physical units method.
- Allocate joint costs using the sales value at split-off method.
- Calculate the cost per unit for gasoline and kerosene.
- Prepare a cost reconciliation statement.
- Discuss the implications of different cost allocation methods on product pricing and profitability.s
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