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Fire Rylo company manufactures two types of coldpressed olive oil refined oil and top-quality oil out...

Fire Rylo company manufactures two types of coldpressed olive oil refined oil and top-quality oil out of a joint process the joint common cost incurred are 92,500 for a standard production run that generates 30,000 gallons of refined oil and 15,000 gallons of top-quality oil
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Answer #1

Distribution of joint cost on the basis of physical quantities.

Since the number of gallons of both oils are given, best method to distribute the joint cost will be based on physical quantities.

Total Joint Cost = $92,500

Distribution of joint cost.

Refined oil = 92,500 * 30,000 / (30,000 + 15,000)

Refined oil = 92,500 * 30,000 / 45,000

Refined oil = 61,667

Top Quality oil = 92,500 * 15,000 / (30,000 + 15,000)

Top Quality oil = 92,500 * 15,000 / 45,000

Top Quality oil = 30,333

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