Question

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 $12,000. 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:

Gasoline $2 per gallon
Diesel 1 per gallon
Kerosene 3 per gallon
Using the market value at split-off method, allocate the $12,000 joint cost of production to each product.
Joint Product Allocation
Gasoline $
Diesel
Kerosene
Totals $

Answer 1

Answer: See attachment

Step-by-step explanation:

Allocation rate was calculated as:

Gasoline: 6830/13660 × 100 = 50%

Diesel: 2732/13660 × 100 = 20%

Kerosene: 1366/13660 × 100 = 30%

Cost to be allocated:

Gasoline = 50% × $12000 = $6000

Diesel: 20% × $12000 = $2400

Kerosene: 30% × $12000 = $3600

Check the attachment for further details.