Question 2 Omega Oil Refinery manufactures vegetable oil from sun-flower plants and refines the Crude vegetable oil. The refining process results in four products at the split off: Crude Sweet, Crude Vigar, Crude Chilly and Fibra. Fibra is fully processed at the split off. Crude Sweet, Crude Vigar, and Crude Chilly can be individually be further refined into Sun Sweet, Sun Vigar and Sun Chilly respectively. The joint costs of crushing and processing sunflower to crude vegetable oil was N$ 2 100 000 Omega Refinery had no beginning and ending inventories. Omega Refinery has the option of selling all four products at the split off point. This alternative would yield the following sales for October 2022 production. Products N$ Crude Sweet @N$10 each 1 000 000 Crude Vigar @N$12 each 600 000 Crude Chilly @N$7 each 1 400 000 Fibra @N$20 each 1 000 000 Page 2 of 5 The following data relates to sales of the refined products in October 2022: Products Further process costs to make super products N$ Sales N$ Sun Sweet 4 000 000 6 000 000 Sun Vigar 1 800 000 2 000 000 Sun Chilly 1 800 000 2 800 000 REQUIRED: 2.1 Allocate joint costs according to the physical measure method. 2.2 Determine whether the entity should process Crude Vigar into Sun Vigar.
Question 2
Omega Oil Refinery manufactures vegetable oil from sun-flower plants and refines the Crude
vegetable oil. The refining process results in four products at the split off: Crude Sweet, Crude
Vigar, Crude Chilly and Fibra.
Fibra is fully processed at the split off. Crude Sweet, Crude Vigar, and Crude Chilly can be
individually be further refined into Sun Sweet, Sun Vigar and Sun Chilly respectively.
The joint costs of crushing and processing sunflower to crude vegetable oil was N$ 2 100 000
Omega Refinery had no beginning and ending inventories.
Omega Refinery has the option of selling all four products at the split off point. This alternative
would yield the following sales for October 2022 production.
Products N$
Crude Sweet @N$10 each 1 000 000
Crude Vigar @N$12 each 600 000
Crude Chilly @N$7 each 1 400 000
Fibra @N$20 each 1 000 000
Page 2 of 5
The following data relates to sales of the refined products in October 2022:
Products
Further
costs
products N$
Sales
N$
Sun Sweet 4 000 000 6 000 000
Sun Vigar 1 800 000 2 000 000
Sun Chilly 1 800 000 2 800 000
REQUIRED:
2.1 Allocate joint costs according to the physical measure method.
2.2 Determine whether the entity should process Crude Vigar into Sun
Vigar.
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