Royal Dutch Shell refines crude oil into gasoline, diesel, and lubricants. In August 2036, the company processes 150,000 barrels of crude oil costing $7,500,000. Production yields:

• Gasoline: 90,000 barrels
• Diesel: 40,000 barrels
• Lubricants: 20,000 barrels

Requirements:

• Allocate joint costs using the sales value at split-off method.
• Determine the cost per equivalent unit for gasoline, diesel, and lubricants.
• Allocate joint costs using the physical units method.
• Prepare a cost reconciliation statement showing the allocation of joint costs to main and by-products.
• Analyze the profitability of each product line.