Sunrise Oil Mills Ltd. is engaged in refining crude vegetable oil into multiple marketable products. During the refining process, a single…

Sunrise Oil Mills Ltd. is engaged in refining crude vegetable oil into multiple marketable products. During the refining process, a single manufacturing operation results in the simultaneous production of four joint products—AOXE, BOXE, COXE, and DOXE. Up to the point where these products become separately identifiable (known as the split-off point), the company incurs common manufacturing costs that cannot be traced to any individual product. These costs are therefore treated as joint costs. For the quarter ending 31 March 2026, the company incurred a total joint processing cost of ₹1,48,000 up to the split-off point. After separation, management has the option of either selling the products immediately at the split-off point or carrying out additional processing to enhance their quality, increase their market value, and sell them as finished products. The production, additional processing costs, and final sales values after further processing for the quarter are summarized below: Product Output (Liters) Additional Processing Cost after split off (₹) Final Sales Value (₹) AOXE 8,000 43,000 1,72,500 BOXE 4,000 9,000 15,000 COXE 2,000 – 6,000 DOXE 4,000 1,500 45,000 The production manager has informed the finance department that all four products could alternatively be sold immediately at the split-off point, thereby avoiding any further processing costs. Based on prevailing market conditions, the estimated selling prices at the split-off point are as follows: Product Selling Price at Split-off (₹ per Liter) AOXE 15.00 BOXE 6.00 COXE 3.00 DOXE 7.50 The finance manager has been asked to evaluate the profitability of the products under different joint cost allocation methods and to determine whether the additional processing undertaken after the split-off point is economically justified. Management is particularly interested in comparing allocations based on physical output, sales value at split-off, and net realizable value (NRV), as well as assessing the incremental revenues and incremental costs associated with further processing. Assume that all units produced during the quarter were sold and that there are no opening or closing inventories. Unless otherwise stated, ignore taxes and other indirect costs. Based on the above information, answer the following questions (MCQ 1 to 5):