Physical Units Method, Relative Sales Value Method

Farleigh Petroleum, Inc., is a small company that acquires high$-$grade crude oil from low$-$volume production wells owned by individuals and

small partnerships. The crude oil is processed in a single refinery into Two Oil, Six Oil, and impure distillates. Farleigh Petroleum does not

have the technology or capacity to process these products further and sells most of its output each month to major refineries. There were no

beginning finished goods or work$-$in$-$process inventories on April $1.$ The production costs and output of Farleigh Petroleum for April are as

follows:

Crude oil placed into production

Direct labor and related costs

Manufacturing overhead

$$6,600,000$

$1,400,000$

$3,000,000$

Data on barrels produced and selling price:

Two Oil, $300,000$ barrels produced; sales price, $$45$ per barrel

Six Oil, $180,000$ barrels produced; sales price, $$25$ per barrel

Distillates, $70,000$ barrels produced; sales price, $$14$ per barrel

Required:

Calculate the amount of joint production cost that Farleigh Petroleum would allocate to each of the three joint products by using the

physical units method. $($Carry out the ratio calculation to four decimal places. Round allocated costs to the nearest dollar.$)$

$($Note: The total of the allocated costs does not equal due to rounding error.$)$

Calculate the amount of joint production cost that Farleigh Petroleum would allocate to each of the three joint products by using the

relative sales value method. $($Carry out the ratio calculation to four decimal places. Round allocated costs to the nearest dollar.$)$