The Sunny Oil Company buys crude vegetable oil. Refining this oil results in four products at the splitoff point: A, B, C, and D. Product C is fully processed by the splitoff point. Products A, B, and D can individually be further refined into Super A, Super B, and Super D. Data related to December are:

The output at the splitoff point was:

Product A	400,000 litres
Product B	200,000 litres
Product C	100,000 litres
Product D	100,000 litres

The joint costs of purchasing and processing the crude vegetable oil were $200,000. Sunny had no beginning or ending inventories. Sales of product C in December were $100,000. Products A, B, and D were further refined and then sold. Data related to December are:

	Separable Processing
	Costs to Make
	Super Products	Sales
Super A	$290,000	$450,000
Super B	110,000	150,000
Super D	90,000	150,000

Sunny had the option of selling products A, B, and D at the splitoff point. This alternative would have yielded the following revenues for the December production:

Product A	$140,000
Product B	80,000
Product D	40,000

Requirements

1. Compute the gross margin percentage for each product sold in December, using the following methods for allocating the $200,000 joint costs:

a. Sales value at splitoff.b. Physical measure. c. NRV.

2. Could sunny have increased its December operating income by making different decisions about the further processing of products A, B, or D? Show the effect on operating income of any changes you recommend.