Clean-Burn,Inc Production and Sales
Two Oil,300,000 Barrels Produced;280,000 Barrels Sold at from Low-Volume

Essay

Clean-Burn,Inc.is a small petroleum 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.Clean-Burn 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 inventories on November 1. $$\begin{array} { | l | c | } \hline \text { Crude oil acquired and placed into production } & \$ 5,000,000 \\\hline \text { Direct labor and related costs } & 2,000,000 \\\hline \text { Refinery overhead } & 3,000,000 \\\hline\end{array}$$ Production and sales
Two Oil,300,000 barrels produced;280,000 barrels sold at $20 each.Six Oil,240,000 barrels produced;220,000 barrels sold at $30 each.Distillates,120,000 barrels produced and sold at $15 per barrel.Required:
a.Allocate the joint costs to the products using the physical quantities method.b.Allocate the joint costs to the products using the net realizable value method.