Chapter 5, Problem 17E

Joint cost allocation-market value at split-off method

Toil & Oil 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 112,000. 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:

Using the market value at split-off method, allocate the $12,000 joint cost of production to each product.