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