Answer (A) is correct . The total production costs incurred are $10,000,000, consisting of crude oil of $5,000,000, direct labor of $2,000,000, and manufacturing overhead of $3,000,000. The total physical output was 660,000 barrels, consisting of 300,000 barrels of Two Oil, 240,000 barrels of Six Oil, and 120,000 barrels of distillates. Thus, the allocation (rounded) is $3,636,000 {[240,000 ¡Â (300,000 + 240,000 + 120,000)] ¡Á $10,000,000}.Answer (B) is incorrect because The amount of $3,750,000 is based on the physical quantity of units sold, not units produced.
Answer (C) is incorrect because The figure of $1,818,000 is the amount that would be assigned to distillates.
Answer (D) is incorrect because Six Oil does not compose 75% of the total output in barrels.
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The portion of Petro-Chem’s joint production costs assigned to Six Oil based upon physical output would be
