Joint cost allocation with costs after split-off and by-product revenue (Similar to self...

Joint cost allocation with costs after split-off and by-product revenue (Similar to self-study Problem 2)

Wildcat 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:

Required:

Determine the allocation of joint costs using the adjusted sales 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.)

Reference:

Joint Products and By-Products Costing

Ottumwa Meatpackers Inc. processes hogs into bacon, ham, pork roast, and spare ribs. The materials, labor, and overhead processing costs to get the products to the point where they can be separately identified total $10,000,000. Additional information includes:

A by-product, animal fat, was sold for a total of $1,000,000 at the split-off point.

Required:

Determine the allocation of joint costs, using the relative sales value method.