Crude Oil Processors produce three products from crude oil: Heating Oil, Gasoline, and Diesel. The sales value at split-off point is used to allocate joint costs. The following information is available about their processes:
Heating Oil Gasoline Diesel Total
Units produced (barrels)3,600 ? ? 15,000
Sales value at split-off point ? ? $75,000 $300,000
Allocated joint costs $72,000 ? ? $180,000
Sales value if processed further $165,000 $135,000 $90,000 $390,000
Separable cost if processed further $27,000 $21,000 $15,000 $63,000
a)What is the sales value at split-off point for Heating Oil?
b)What are the allocated joint costs for Gasoline?
c)Should the company sell Diesel at the split-off point or process it further? Provide computations to support your answer.
d)Assume the company allocates joint costs using a physical output method, with volume measuring as number of units. How much joint cost would be allocated to Heating Oil?

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The Answer of Crude Oil Processors produce three products from crude oil: Heating Oil, Gasoline, and Diesel. The sales value at split-off point is used to allocate joint costs. The following information is available about their processes:
Heating Oil Gasoline Diesel Total
Units produced (barrels)3,600 ? ? 15,000
Sales value at split-off point ? ? $75,000 $300,000
Allocated joint costs $72,000 ? ? $180,000
Sales value if processed further $165,000 $135,000 $90,000 $390,000
Separable cost if processed further $27,000 $21,000 $15,000 $63,000
a)What is the sales value at split-off point for Heating Oil?
b)What are the allocated joint costs for Gasoline?
c)Should the company sell Diesel at the split-off point or process it further? Provide computations to support your answer.
d)Assume the company allocates joint costs using a physical output method, with volume measuring as number of units. How much joint cost would be allocated to Heating Oil?

Crude Oil Processors Produce Three Products from Crude Oil: Heating