Syarikat Penapisan Petroleum Berhad produces three joint products; Gasoline, Kerosene dan Diesel; and byproduct, i.e. Tar...

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Syarikat Penapisan Petroleum Berhad produces three joint products; Gasoline, Kerosene dan Diesel; and byproduct, i.e. Tar in the same refinery process. The split-off point incurred after the processing in the main Refinery Department ended. Gasoline and Kerosene are further processes before they can be sold. The following is cost information for December 2023: Costs in the main Refinery Department: Direct material RM50,000 Direct labour RM20,000 Manufacturing overhead RM10,000 Production units Gasoline Kerosene Diesel 25,000 barrels 20,000 barrels 15,000 barrels 11,250 barrels Tar Further process costs: Gasoline Kerosene Tar RM3,750 RM2,000 RM1,000 Sales price of joint products: Gasoline Kerosene Diesel Estimated sales value of Tar, RM12,000. RM1.75 per barrel (after further process) RM2.50 per barrel (after further process) RM3.00 per barrel (at split off point) Administrative and marketing expenses for Tar, RM3,000. Net sales of Tar is used to reduce joint costs. Required: a) Calculate the joint costs to be allocated to joint products. b) Allocate joints costs according to: i) Physical unit measure method ii) Net realisable value method iii) Gross margin percentage method c) Currently, the company is considering to further process Diesel with additional costs of RM20,000. The output of the additional process can be sold at the prices of RM5.25 per barrels. Should the company continue with this proposal? Syarikat Penapisan Petroleum Berhad produces three joint products; Gasoline, Kerosene dan Diesel; and byproduct, i.e. Tar in the same refinery process. The split-off point incurred after the processing in the main Refinery Department ended. Gasoline and Kerosene are further processes before they can be sold. The following is cost information for December 2023: Costs in the main Refinery Department: Direct material RM50,000 Direct labour RM20,000 Manufacturing overhead RM10,000 Production units Gasoline Kerosene Diesel 25,000 barrels 20,000 barrels 15,000 barrels 11,250 barrels Tar Further process costs: Gasoline Kerosene Tar RM3,750 RM2,000 RM1,000 Sales price of joint products: Gasoline Kerosene Diesel Estimated sales value of Tar, RM12,000. RM1.75 per barrel (after further process) RM2.50 per barrel (after further process) RM3.00 per barrel (at split off point) Administrative and marketing expenses for Tar, RM3,000. Net sales of Tar is used to reduce joint costs. Required: a) Calculate the joint costs to be allocated to joint products. b) Allocate joints costs according to: i) Physical unit measure method ii) Net realisable value method iii) Gross margin percentage method c) Currently, the company is considering to further process Diesel with additional costs of RM20,000. The output of the additional process can be sold at the prices of RM5.25 per barrels. Should the company continue with this proposal?

Answer rating: 100% (QA)

a To calculate the joint costs to be allocated to joint products we need to sum up the direct material direct labor and manufacturing overhead costs in the main Refinery Department Total joint costs D... View the full answer