Question
Texas Oil Co. transports crude oil to its refinery where it is processed into main products gasoline, kerosene, and diesel fuel, and by-product base oil.
Texas Oil Co. transports crude oil to its refinery where it is processed into main products gasoline, kerosene, and diesel fuel, and by-product base oil. The base oil is sold at the split-off point for $500,000 of annual revenue, and the joint processing costs to get the crude oil to split-off are $5,000,000. Additional information includes:
Product Barrels Produced Cost after split-off Selling Price per Barrel
Gasoline 500,000 $2,000,000 $100
Kerosene 100,000 500,000 80
Diesel fuel 250,000 1,000,000 60
,Required:,Determine the allocation of joint costs using the net realizable value method, rounding the sales value percentages to the nearest tenth of a percent.
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started