Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Farleigh Petroleum, Inc., is a small company that acquires high - grade crude oil from low - volume production wells owned by individuals and small

Farleigh Petroleum, Inc., is a small company that acquires high-grade crude oil from low-volume production wells owned by individuals and small partnerships. The crude oil is processed in a single refinery into Two Oil, Six Oil, and impure distillates. Farleigh Petroleum does not have the technology or capacity to process these products further and sells most of its output each month to major refineries. There were no beginning finished goods or work-in-process inventories on April 1. The production costs and output of Farleigh Petroleum for April are as follows:
Crude oil placed into production $6,400,000
Direct labor and related costs 1,500,000
Manufacturing overhead 3,000,000
Data on barrels produced and selling price:
Two Oil, 300,000 barrels produced; sales price, $45 per barrel
Six Oil, 180,000 barrels produced; sales price, $25 per barrel
Distillates, 90,000 barrels produced; sales price, $14 per barrel
Required:
2. Calculate the amount of joint production cost that Farleigh Petroleum would allocate to each of the three joint products by using the relative sales value method. (Carry out the ratio calculation to four decimal places. Round allocated costs to the nearest dollar.)
*Note: The Allocated Total Cost by using the Relative Sales Value Method is NOT 10,900,000. Please check on the images for your reference!
Please give clear explaination on how you get the answers. Thank you!
image text in transcribed

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image_2

Step: 3

blur-text-image_3

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Cost Accounting A Managerial Emphasis International

Authors: Charles T. Horngren, Srikant M. Datar, George Foster

11th Edition

8120323548, 978-8120323544

More Books

Students also viewed these Accounting questions

Question

11.5 Describe the grievance procedure in a union environment.

Answered: 1 week ago

Question

11.6 Explain union decertification.

Answered: 1 week ago