Stenback Oil & Gas, a large energy conglomerate, jointly processes purchased hydrocarbons to generate three nonsalable intermediate products: ICR8, ING4, and XGE3. These intermediate products are further processed separately to produce crude oil, natural gas liquids (NGL), and natural gas (measured in liquid equivalents). (Click the icon to view the overview.) II. A federal law that has recently been passed taxes crude oil at 30% of operating income. No new tax is to be paid on natural gas liquid or natural gas. (Click the icon to view additional information.) Read the requirements. Requirements Requirement 1. Allocate the August 2017 joint cost arony uit ulice products using the (a) Physical-measure method and (b) NRV method. First, allocate the August 2017 joint cost using the physical-measure method. (Round the weights to five decimal places and joint costs to the nearest cent.) Crude Oil NGL Gas Total Physical measure of total production Requirements Weighting Joint costs allocated 1. Allocate the August 2017 joint cost among the three products using the following: a. Physical-measure method b. NRV method. 2. 3. Show the operating income for each product using the methods in requirement 1. Discuss the pros and cons of the two methods to Stenback Oil & Gas for making decisions about product emphasis (pricing, sell-or-process-further decisions, and so on). - X Overview of the process and results. hethod. An overview of the process and results for August 2017 are shown here (Note: The numbers are small to keep the focus on key concepts.) Joint Costs Separable Costs $2,100 Crude Oil Processing ICR8 150 barrels @ $130 $20 per barrel More info Starting August 2017, Stenback Oil & Gas must report a separate product-line income statement for crude oil. One challenge facing Stenback Oil & Gas is how to allocate the joint cost of producing the three separate salable outputs. Assume no beginning or ending inventory. Hydrocarbons Processing ING4 Processing $125 NGL 125 barrels @ $19 per barrel Natural Gas 975 eqvt. barrels @ $1.40 per eqvt. barrel Processing $235 XGE3 Print Done