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Can you assist with the below? Hfx Oil & Gas, a large energy conglomerate, jointly processes purchased hydrocarbons to generate three nonsaleable intermediate products: ICR8,
Can you assist with the below?
Hfx Oil & Gas, a large energy conglomerate, jointly processes purchased hydrocarbons | |||||
to generate three nonsaleable intermediate products: ICR8, ING4, and XGE3. | |||||
These intermediate products are further processed separately to produce crude oil, | |||||
natural gas liquids (NGL), and natural gas (measured in liquid equivalents). | |||||
An overview of the process and results for August 2018 follows: | |||||
Note: numbers are small | |||||
A new law has recently been passed that taxes crude oil at 30% of operating income. | |||||
No new tax is to be paid on natural gas liquid or natural gas. Starting August 2018 | |||||
Hfx Oil & Gas must report a separate product-line income statement for crude oil. One challenge facing | |||||
Hfx Oil & Gas is how to allocate the joint cost of producing the three separate saleable outputs. | |||||
Assume no beginning or ending inventory. | |||||
Crude Oil | NGL | Gas | |||
Joint Costs | $ 1,600 | ||||
Separable Costs | $ 210 | $ 90 | $ 235 | ||
175 barrels @ $22 | 75 barrels @ $13 | 550 eq barrels @ $1.50 |
Question 1.
Allocate the August 2018 joint Cost among the three products using physical measures method (8) |
Prepare opertaing income statement for each product required in 1 (5) |
Allocate the August 2018 joint Cost among the three products using NRV method (8) |
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