Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Petro-Chem, 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

Petro-Chem, 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. Petro-Chem 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 inventories of finished goods or work-in-process on November 1. The production costs and output of Petro-Chem for November are shown in the next column.

Crude oil acquired and placed

in production

$5,000,000

Direct labor and related costs

2,000,000

Manufacturing overhead

3,000,000

Production and sales

Two Oil, 300,000 barrels produced; 80,000 barrels sold at $20 each

Six Oil, 240,000 barrels produced; 120,000 barrels sold at $30 each

Distillates, 120,000 barrels produced and sold at $15 each

Question

The portion of Petro-Chems joint production costs assigned to Six Oil based upon physical output would be

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

Step: 3

blur-text-image

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

Essentials Of Xbrl Financial Reporting In The 21st Century

Authors: Bryan Bergeron

1st Edition

0471220779, 978-0471220770

More Books

Students also viewed these Accounting questions