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The industrial company Gas Exports S.A. prepares nitrogen, oxygen, and hydrogen with a common production process. Any gas can be liquefied and then sold. All gases have a sale value at the split point. Here are the processing details:

| Product | Nitrogen | Oxygen | Hydrogen | Total |
|----------|----------|--------|----------|--------|
| Units produced | 8000 | 4000 | 2000 | 14000 |
| Shared/Joined cost | 30000 Euros | (a) | (b) | 60000 Euros |
| Sale value at split point | (c) | (d) | 15000 Euros | 100000 Euros |
| Additional cost of liquefaction | 7000 Euros | 5000 Euros | 3000 Euros | 15000 Euros |
| Sale value after liquefaction | 60000 Euros | 40000 Euros | 17000 Euros | 117000 Euros |

* This amount corresponds to the part of the total shared/joined cost of 60000 euros which was allocated to nitrogen.

Calculate the amounts missing in the above table and represented by letters a to d, taking into account that the company uses the method of sales value at the point of split for the apportionment of joined costs.

Answer :

Final answer:

The values missing and represented by letters a to d are calculated as follows: (a) 15,000 Euros (Shared cost for Oxygen), (b) 7,500 Euros (Shared cost for Hydrogen), (c) 50,000 Euros (Sales value at split point for Oxygen), and (d) 25,000 Euros (Sales value at split point for Hydrogen). Base on the method of sales value at split point for apportionment of joint costs.

Explanation:

In the case of Gas Exports S.A, the total shared or joined cost is 60,000 Euros which results in a split cost of 30,000 Euros for Nitrogen. For identification of unknown figures represented as 'a' to 'd', we use the method of sales value at the split point for apportionment of joined costs.

Knowing that, we can take ratios of units produced and sale value at split point to determine the shared cost and sales value at split point for the other gases. For instance, since we know that Nitrogen has double the units of Oxygen and quadruple the units of Hydrogen, we can infer that these would also receive a proportion of the shared cost and sales value at split point accordingly, i.e. Oxygen would have half the amount as Nitrogen and Hydrogen would have one-fourth.

Therefore, Oxygen would have a shared cost of 15,000 euros and Hydrogen would have a shared cost of 7,500 euros.

This results in:
(a) 15,000 Euros
(b) 7,500 Euros.

Similarly, we can calculate the sales value at the split points for Oxygen and Hydrogen by splitting the 100,000 Euros proportional to the units produced. Oxygen which has half the units produced of Nitrogen would have 50,000 Euros and Hydrogen which has one fourth, would have 25,000 Euros.

This results in:
(c) 50,000 Euros
(d) 25,000 Euros.

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