Molo Oil Company produces gasoline, home heating oil, and jet fuel from crude oil in a joint processing operation. Joint processing costs up to the split-off point total $330,000 per month. For financial reporting purposes, the company allocates these costs to the joint products on the basis of their relative sales value at the split-off point. Unit selling prices and total output at the split-off point are as follows: Monthly Output 12, 200 gallons Product Selling Price Gasoline $ 16.00 per gallon Heating $10.00 per gallon Oil Jet Fuel $22.00 per gallon 19, 100 gallons 3,400 gallons Each product can be processed further after the split-off point. Additional processing requires no special facilities. The additional processing costs (per quarter) and unit selling prices after further processing are given below: Product Gasoline Heating Additional Processing Costs $61,390 $ 87,645 $35,300 Selling Price $20.70 per gallon $15.70 per gallon $29.70 per gallon oil Jet Fuel Required: 1. What is the financial advantage (disadvantage) of further processing each of the three products beyond the split-off point? 2. Based on your analysis in requirement 1, which product or products should be sold at the split-off point and which product or products should be processed further? Complete this question by entering your answers in the tabs below. Required 1 Required 2 What is the financial advantage (disadvantage) of further processing each of the three products beyond the split-off point? Gasoline Home Heating Oil Jet Fuel Financial advantage (disadvantage) of further processing Molo Oil Company produces gasoline, home heating oil, and jet fuel from crude oil in a joint processing operation. Joint processing costs up to the split-off point total $330,000 per month. For financial reporting purposes, the company allocates these costs to the joint products on the basis of their relative sales value at the split-off point. Unit selling prices and total output at the split-off point are as follows: Product Selling Price Gasoline $16.00 per gallon Heating $10.00 per gallon Oil Jet Fuel $22.00 per gallon Monthly Output 12, 200 gallons 19,100 gallons 3,400 gallons Each product can be processed further after the split-off point. Additional processing requires no special facilities. The additional processing costs (per quarter) and unit selling prices after further processing are given below: Additional Processing Costs $ 61,390 Product Gasoline Heating Oil Jet Fuel Selling Price $20.70 per gallon $15.70 per gallon $29.70 per gallon $ 87,645 $ 35, 300 Required: 1. What is the financial advantage (disadvantage) of further processing each of the three products beyond the split-off point? 2. Based on your analysis in requirement 1, which product or products should be sold at the split-off point and which product or products should be processed further? Complete this question by entering your answers in the tabs below. Required 1 Required 2 Based on your analysis in requirement 1, which product or products should be sold at the split-off point and which product or products should be processed further? Gasoline Home Heating Oil Jet Fuel Sell at split-off point? Process further?
