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| Petro-Chem 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. Petro-Chem 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 inventories of finished goods or work-in-process on November 1. The production costs and output of Petro-Chem for November are as follows: Crude oil acquired and placed in production: $5,000,000 Direct labor and related costs: $2,000,000 Factory overhead: $3,000,000 Production and sales: Two Oil, 300,000 barrels produced; 80,000 barrels sold at $20 each. Six Oil, 240,000 barrels produced; 120,000 barrels sold at $30 each. Distillates, 120,000 barrels produced and sold at $15 per barrel. The portion of the joint production costs assigned to Six Oil based upon physical output would be A. $3,636,000 B. $1,818,000 C. $3,750,000 D. $7,500,000 |