Question

a large energy conglomerate, jointly processes purchased hydrocarbons to generate three nonsaleable intermediate products: ICR8, ING4, and XGE3. These intermediate products are further processed separately to produce crude oil, natural gas liquids (NGL), and natural gas (measured in liquid equivalents). An overview of the process and results for August 2018 is shown here. (Note: The numbers are small to keep the focus on key concepts.) 3. (Click the icon to view the overview diagram.) A federal law has recently been passed that taxes crude oil at 30% of operating income. No new tax is to be paid on natural gas liquid or natural gas. Starting August 2018, Rieppel Oil Gas must report a separate product-line income statement for crude oil. One challenge facing Rieppel Oil & Gas is how to allocate the joint cost of producing the three separate saleabl outputs. Assume no beginning or ending inventory. Required Requirement 1a. Allocate the August 2018 joint cost among the three products using the physical measure method. (Round the weightings to five decimal places and joint costs to the nearest cent.) Crude Oil NGL Gas Total Physical measure of total production C C C Weighting Joint costs allocated 1 Overview of the process and results. - Separable Costs Joint Costs $1,600 > - - - ICR8 Processing! $ 175 Crude Oil 150 barrels @ $18 per barrel - - Hydrocarbons Processing ING4 Processing $ 105 NGL 50 barrels @ $15 per barrel XGE3 Processing $210 Natural Gas 800 eqvt. barrels @ $1.30 per eqvt. barrel Enter any number in the edit fields and then continue to th

Answer 1

physical measure method

in this method,joint costs are apportioned on the basis of physical measures like quantity ,weight etc

given joint cost for crude oil ,ngl,natural gas is $1800

calculation is as follows

particulars	crude oil	ngs	gas	total
physical measure(in barrels)	150	50	800	1000
weighting ratio(a)	0.15	0.05	0.8
	(150/1000)	(50/1000)	(800/1000)
joint costs allocated	270	90	1440	1800
($1800*(a)