17th Edition

ISBN: 9781305692862

Author: Edward J. Vanderbeck; Maria R. Mitchell

Publisher: Cengage Learning US

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Textbook Question

Chapter 6, Problem 13P

Venezuela Oil Inc. 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 $1,000,000 of annual revenue, and the joint processing costs to get the crude oil to split-off are $10,000,000. Additional information includes:

Chapter 6, Problem 13P, Venezuela Oil Inc. transports crude oil to its refinery where it is processed into main products

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. (Hint: Reduce the amount of the joint costs to be allocated by the amount of the by-product revenue.)

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Chapter 6, Problem 12P

Chapter 6, Problem 1MC

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Chapter 6 Solutions

Principles of Cost Accounting

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Solution Summary: The author explains how to calculate the allocation of joint costs using net realizable value method.

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