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Molo Oil Company produces gasoline, home heating oil, and jet fuel from crude oil in a joint processing operation. Joint processing costs up to the split-off point total $345,000 per month. For financial reporting purposes, the company allocates these costs to the joint products on the basis of their relative sales value at the split-off point. Unit selling prices and total output at the split-off point are as follows: Product Selling Price Gasoline $19.00 per gallon Heating $13.00 per gallon Oil Jet Fuel $25.00 per gallon Monthly Output 12,800 gallons 20,000 gallons 4,000 gallons Each product can be processed further after the split-off point. Additional processing requires no special facilities. The additional processing costs (per quarter) and unit selling prices after further processing are given below: Product Gasoline Heating Oil Jet Fuel Additional Processing Costs $68,500 $ 98, 250 $ 41,600 Selling Price $24.00 per gallon $19.00 per gallon $33.00 per gallon Required: 1. What is the financial advantage (disadvantage) of further processing each of the three products beyond the split-off point? 2. Based on your analysis in requirement 1, which product or products should be sold at the split-off point and which product or products should be processed further? Complete this question by entering your answers in the tabs below. Required 1 Required 2 What is the financial advantage (disadvantage) of further processing each of the three products beyond the split-off point? Home Gasoline Jet Fuel Heating Oil Financial advantage (disadvantage) of further processing Molo Oil Company produces gasoline, home heating oil, and jet fuel from crude oil in a joint processing operation. Joint processing costs up to the split-off point total $345,000 per month. For financial reporting purposes, the company allocates these costs to the joint products on the basis of their relative sales value at the split-off point. Unit selling prices and total output at the split-off point are as follows: Product Selling Price Gasoline $19.00 per gallon Heating $13.00 per gallon Oil Jet Fuel $25.00 per gallon Monthly Output 12,800 gallons 20,000 gallons 4,000 gallons Each product can be processed further after the split-off point. Additional processing requires no special facilities. The additional processing costs (per quarter) and unit selling prices after further processing are given below: Product Gasoline Heating Oil Jet Fuel Additional Processing Costs $68,500 $98,250 $ 41,600 Selling Price $24.00 per gallon $19.00 per gallon $33.00 per gallon Required: 1. What is the financial advantage (disadvantage) of further processing each of the three products beyond the split-off point? 2. Based on your analysis in requirement 1, which product or products should be sold at the split-off point and which product or products should be processed further? Complete this question by entering your answers in the tabs below. Required 1 Required 2 Based on your analysis in requirement 1, which product or products should be sold at the split-off point and which product or products should be processed further? Gasoline Home Heating Oil Jet Fuel Sell at split-off point? Process further? Required 1

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