Hanseatic Crude Oil Refinery (HCOR) imports crude oil from Norway and processes it in its refinery located in Northern Germany. The processing of crude oil can result in the joint products petroleum naphtha, gasoline, jet fuel, kerosene, diesel, heavy fuel oil and asphalt, as well as other petrochemical derivatives. The refinery process has variable proportions depending on the distilling temperatures and cracking intensity. The specific process of HCOR produces the joint products petroleum naphtha, heavy fuel oil and gasoline. The petroleum naphtha is shipped to Hanseatic's U.S. subsidiary for sale to the chemical industry in the United States. The heavy fuel oil is sold through Hanseatic's Netherlands subsidiary in Rotterdam to be used in seagoing vessels. The gasoline for automobiles is sold in Germany. The joint costs of refining one batch (= 1.000 Barrels of Oil) are 248.000 . The following table summarizes the weight of the products in each batch refined, the additional costs to transport the products to the final destination and selling them there, the selling price of each product (all converted to Euro), and the income tax rates that apply to any income derived from the oil products sold in the country of final sale. Petroleum Naphtha 248 Heavy fuel oil 124 Gasoline 868 205,00 425,00 Weight in tons per batch Additional costs for transport and selling per ton Selling price per ton Income tax rate Country of final sale 335,00 985,00 30% United States of America 660,00 15% Netherlands 910,00 45% Germany Required: a. Calculate the joint cost per ton of each oil product (petroleum naphtha, heavy fuel oil and gasoline) using the relative weight in each batch to allocate the 248.000 of joint costs. (Round all decimals to four significant digits.) b. Calculate the joint cost per ton of each oil product (petroleum naphtha, heavy fuel oil and gasoline) using the net realizable value of each product (before taxes) to allocate the 248.000 joint costs. (Round all decimals to four significant digits.) c. Which method of allocating the joint cost of 248.000 (relative weight or net realizable value) should HCOR use, if taxes are not taken into consideration? Explain why. d. Which method of allocating the joint cost of 248.000 (relative weight or net realizable value) should HCOR use, if taxes are taken into consideration? Explain why. Hanseatic Crude Oil Refinery (HCOR) imports crude oil from Norway and processes it in its refinery located in Northern Germany. The processing of crude oil can result in the joint products petroleum naphtha, gasoline, jet fuel, kerosene, diesel, heavy fuel oil and asphalt, as well as other petrochemical derivatives. The refinery process has variable proportions depending on the distilling temperatures and cracking intensity. The specific process of HCOR produces the joint products petroleum naphtha, heavy fuel oil and gasoline. The petroleum naphtha is shipped to Hanseatic's U.S. subsidiary for sale to the chemical industry in the United States. The heavy fuel oil is sold through Hanseatic's Netherlands subsidiary in Rotterdam to be used in seagoing vessels. The gasoline for automobiles is sold in Germany. The joint costs of refining one batch (= 1.000 Barrels of Oil) are 248.000 . The following table summarizes the weight of the products in each batch refined, the additional costs to transport the products to the final destination and selling them there, the selling price of each product (all converted to Euro), and the income tax rates that apply to any income derived from the oil products sold in the country of final sale. Petroleum Naphtha 248 Heavy fuel oil 124 Gasoline 868 205,00 425,00 Weight in tons per batch Additional costs for transport and selling per ton Selling price per ton Income tax rate Country of final sale 335,00 985,00 30% United States of America 660,00 15% Netherlands 910,00 45% Germany Required: a. Calculate the joint cost per ton of each oil product (petroleum naphtha, heavy fuel oil and gasoline) using the relative weight in each batch to allocate the 248.000 of joint costs. (Round all decimals to four significant digits.) b. Calculate the joint cost per ton of each oil product (petroleum naphtha, heavy fuel oil and gasoline) using the net realizable value of each product (before taxes) to allocate the 248.000 joint costs. (Round all decimals to four significant digits.) c. Which method of allocating the joint cost of 248.000 (relative weight or net realizable value) should HCOR use, if taxes are not taken into consideration? Explain why. d. Which method of allocating the joint cost of 248.000 (relative weight or net realizable value) should HCOR use, if taxes are taken into consideration? Explain why
