Joint Cost Allocation—Market Value at Split-off Method Burn-on Inc. processes crude oil to jointly produce gasoline, diesel, and kerosene. One batch produces 3,415 gallons of gasoline, 2,732 gallons of diesel, and 1,366 gallons of kerosene at a joint cost of $15,800. After the split-off point, all products are processed further, but the estimated market price for each product at the split-off point is as follows: Product Unit Price Gasoline $2 per gallon Diesel 1 per gallon Kerosene 3 per gallon Using the market value at split-off method, allocate the $15,800 joint cost of production to each product. Joint Product Allocation Gasoline $fill in the blank 1 Diesel fill in the blank 2 Kerosene fill in the blank 3 Totals $fill in the blank 4
Joint Cost Allocation—Market Value at Split-off Method Burn-on Inc. processes crude oil to jointly produce gasoline, diesel, and kerosene. One batch produces 3,415 gallons of gasoline, 2,732 gallons of diesel, and 1,366 gallons of kerosene at a joint cost of $15,800. After the split-off point, all products are processed further, but the estimated market price for each product at the split-off point is as follows: Product Unit Price Gasoline $2 per gallon Diesel 1 per gallon Kerosene 3 per gallon Using the market value at split-off method, allocate the $15,800 joint cost of production to each product. Joint Product Allocation Gasoline $fill in the blank 1 Diesel fill in the blank 2 Kerosene fill in the blank 3 Totals $fill in the blank 4
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Joint Cost Allocation—Market Value at Split-off Method
Burn-on Inc. processes crude oil to jointly produce gasoline, diesel, and kerosene. One batch produces 3,415 gallons of gasoline, 2,732 gallons of diesel, and 1,366 gallons of kerosene at a joint cost of $15,800. After the split-off point, all products are processed further, but the estimated market price for each product at the split-off point is as follows:
| Product | Unit Price |
|---|---|
| Gasoline | $2 per gallon |
| Diesel | 1 per gallon |
| Kerosene | 3 per gallon |
Using the market value at split-off method, allocate the $15,800 joint cost of production to each product.
| Joint Product | Allocation |
|---|---|
| Gasoline | $fill in the blank 1 |
| Diesel | fill in the blank 2 |
| Kerosene | fill in the blank 3 |
| Totals | $fill in the blank 4 |
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VIEWStep 2: Calculate the total market value at split-off for all products
VIEWStep 3: Calculate the proportion of each product's market value to the total market value at split-off
VIEWStep 4: Allocate the joint cost to each product based on their proportions
VIEWStep 5: Calculate the totals
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