Question 1

Scrap is defined as a

Accepted Answer

A) finished unit of product that has no sales value. 
B) residual of the production process that has limited sales value. 
C) residual of the production process that can be reworked for sale as an irregular unit of product. 
D) residual of the production process that has no sales value. 
A) finished unit of product that has no sales value. 
B) residual of the production process that has limited sales value. 
C) residual of the production process that can be reworked for sale as an irregular unit of product. 
D) residual of the production process that has no sales value.

Question 2

Net realizable value equals product sales revenue at split-off minus any costs necessary to prepare and dispose of the product.

Accepted Answer

A) True 
 B)False

Question 3

Briefly discuss the six steps in the allocation process.

Accepted Answer

The six steps are as follows:
 1.Choose

Question 4

If incremental revenues beyond split-off are less than incremental costs,a product should be sold at the split-off point.

Accepted Answer

A) True 
 B)False

Question 5

Ryan Company
Ryan Company manufactures products X and Y from a joint process that also yields a by-product,Z.Revenue from sales of Z is treated as a reduction of joint costs.Additional information is as follows:
                           Products                                    X       Y       Z       Total               Units produced        20,000        20,000        10,000        50,000               Joint costs       ?       ?       ?        $262,000               Sales value at                                            split-off       $300,000       $150,000       $10,000       $460,000      
Joint costs were allocated using the sales value at split-off approach.
Refer to Ryan Company.The joint costs allocated to product Y were

Accepted Answer

A) $ 84,000 
B) $100,800. 
C) $150,000. 
D) $168,000. 
A) $ 84,000 
B) $100,800. 
C) $150,000. 
D) $168,000.

Question 6

Chambers Company
Chambers Company produces two products from a joint process: X and Z.Joint processing costs for this production cycle are $8,000.
                     Yards        Sales price per yard at split-off       Disposal cost per yard at split-off      Further processing per yard        Final sale price per yard                 X       1,500       $6.00       $3.50       $1.00       $ 7.50               Y       2,200        9.00        5.00        3.00        11.25      
If X and Z are processed further,no disposal costs will be incurred or such costs will be borne by the buyer.
Refer to Chambers Company.Using net realizable value at split-off,what amount of joint processing cost is allocated to Product X (round to the nearest dollar)?

Accepted Answer

A) $4,000 
B) $5,610 
C) $2,390 
D) $5,500 
A) $4,000 
B) $5,610 
C) $2,390 
D) $5,500

Question 7

Industrial Solutions Company
Industrial Solutions Company produces three products from the same process that has joint processing costs of $4,100.Products R,S,and T are produced in the following quantities: 250 gallons,400 gallons,and 750 gallons.Industrial Solutions Company also incurred advertising costs of $60,000.The ad was used to run sales for all three products.The three products occupy floor space in the following ratio: 5:4:9.(Round all answers to the nearest dollar. )
Refer to Industrial Solutions Company.Using gallons as the physical measurement,what amount of joint processing cost is allocated to Product S?

Accepted Answer

A) $2,196 
B) $1,171 
C) $1,367 
D) $ 732 
A) $2,196 
B) $1,171 
C) $1,367 
D) $ 732

Question 8

In a lumber mill,which of the following would most likely be considered a primary product?

Accepted Answer

A) 2 ´ 4 studs 
B) sawdust 
C) wood chips 
D) tree bark 
A) 2 ´ 4 studs 
B) sawdust 
C) wood chips 
D) tree bark

Question 9

Three types of products that result from a joint process are _____________,_________,and __________.

Accepted Answer

joint prod

Question 10

Shiny Floors Company
Shiny Floors Company produces four floor cleaners from the same process: C,D,E,and G.Joint product costs are $9,000.(Round all answers to the nearest dollar. )
                   Barrels          Sales price per barrel at split-off      Disposal cost per barrel at split-off          Further processing costs       Final sales price per barrel              C         750       $10.00       $6.50       $2.00       $13.50               D       1,000        8.00       4.00       2.50       10.00               E       1,400        11.00       7.00       4.00       15.50               G       2,000      15.00        9.50       4.50       19.50      
If Shiny Floors sells the products after further processing,the following disposal costs will be incurred: C,$2.50;D,$1.00;E,$3.50;G,$6.00.
Refer to Shiny Floors Company.Using net realizable value at split-off,what amount of joint processing cost is allocated to Product E?

Accepted Answer

A) $1,017 
B) $1,550 
C) $2,170 
D) $4,263 
A) $1,017 
B) $1,550 
C) $2,170 
D) $4,263

Question 11

Baker Company
Baker Company produces three products: A,B,and C from the same process.Joint costs for this production run are $2,100.
                     Pounds        Sales price per lb. at split-off      Disposal cost per lb. at split-off          Further processing per pound        Final sales price per pound               A        800       $6.50       $3.00       $2.00       $ 7.50               B       1,100        8.25        4.20        3.00       10.00               C       1,500        8.00        4.00        3.50       10.50      
If the products are processed further,Baker Company will incur the following disposal costs upon sale: A,$3.00;B,$2.00;and C,$1.00.
Refer to Baker Company.Using sales value at split-off,what amount of joint processing cost is allocated to Product B (round to the nearest dollar)?

Accepted Answer

A) $700 
B) $416 
C) $725 
D) $959 
A) $700 
B) $416 
C) $725 
D) $959

Question 12

Net realizable value equals product sales revenue at split-off plus any costs necessary to prepare and dispose of the product.

Accepted Answer

A) True 
 B)False

Question 13

Arnold Company processes raw material in Department 1 from which come two main products,A and B,and a by-product,
C.A is further processed in Department 2,B in Department 3,and C in Department 4.The value of the by-product reduces the cost of the main products,and sales value is used to allocate joint costs.
                    Dept 1       Dept 2      Dept 3       Dept 4                Cost Incurred:       $90,000       $10,000       $8,000       $10,000               Production:                                           A       10,000 lbs.                                    B       20,000 lbs.                                    C       10,000 lbs.                                                                               Selling Price:                                           A       $10/lb.                                    B       $5/lb.                                    C       $2/lb.                           Required:
a. Commute unit costs for A and B Commute unit costs for A and B
b. Ending inventoty consists of 5,000 lbs. of B and 1,000 lbs. of C. What is the value of the inventoty? 
 Ending inventoty consists of 5,000 lbs. of B and 1,000 lbs. of C. What is the value of the inventoty? 
c.  Recompute a and b allocating cost based on net realizable value 
 Recompute a and b allocating cost based on net realizable value

Accepted Answer

Required:

Question 14

Industrial Solutions Company
Industrial Solutions Company produces three products from the same process that has joint processing costs of $4,100.Products R,S,and T are produced in the following quantities: 250 gallons,400 gallons,and 750 gallons.Industrial Solutions Company also incurred advertising costs of $60,000.The ad was used to run sales for all three products.The three products occupy floor space in the following ratio: 5:4:9.(Round all answers to the nearest dollar. )
Refer to Industrial Solutions Company.Assume that Industrial Solutions chooses to allocate its advertising cost among the three products.What amount of advertising cost is allocated to Product R using the floor space ratio?

Accepted Answer

A) $30,000 
B) $17,806 
C) $1,139 
D) $16,667 
A) $30,000 
B) $17,806 
C) $1,139 
D) $16,667

Question 15

Kilpatrick Company manufactures products A and B from a joint process.Sales value at split-off was $700,000 for 10,000 units of A,and $300,000 for 15,000 units of B.Using the sales value at split-off approach,joint costs that Kilpatrick allocated to A were $140,000.Total joint costs were

Accepted Answer

A) $ 98,000. 
B) $200,000. 
C) $233,333. 
D) $350,000. 
A) $ 98,000. 
B) $200,000. 
C) $233,333. 
D) $350,000.

Question 16

Fulton Company
Fulton Company is placing an ad in the local paper to advertise its products.The ad will run for one week at a total cost of $5,500.Fulton Company has four categories of products as follows:
                                % of floor space  Expected sales
                                    $\text {\underline{ occupied.} }$   $\text {\underline{ value} }$
$\begin{array}{lcl}
\text { Harchware } & 20 \% & \$ 35,000 \
\text { Hand Tools } & 15 & 15,000 \
\text { Lawn Fumiture } & 45 & 64,500 \
\text { Light Fixtures } & 20 & 25,500
\end{array}$

Refer to Fulton Company.Assume that Fulton decides to allocate based on expected sales value.What amount of advertising cost should be allocated to light fixtures (round to the nearest dollar)?

Accepted Answer

A) $1,375 
B) $589 
C) $1,002 
D) $2,534 
A) $1,375 
B) $589 
C) $1,002 
D) $2,534

Question 17

The primary distinction between by-products and scrap is the difference in volume produced.

Accepted Answer

A) True 
 B)False

Question 18

Shiny Floors Company
Shiny Floors Company produces four floor cleaners from the same process: C,D,E,and G.Joint product costs are $9,000.(Round all answers to the nearest dollar. )
                   Barrels          Sales price per barrel at split-off      Disposal cost per barrel at split-off          Further processing costs       Final sales price per barrel              C         750       $10.00       $6.50       $2.00       $13.50               D       1,000        8.00       4.00       2.50       10.00               E       1,400        11.00       7.00       4.00       15.50               G       2,000      15.00        9.50       4.50       19.50      
If Shiny Floors sells the products after further processing,the following disposal costs will be incurred: C,$2.50;D,$1.00;E,$3.50;G,$6.00.
Refer to Shiny Floors Company.Using net realizable value at split-off,what amount of joint processing cost is allocated to Product D?

Accepted Answer

A) $1,550 
B) $1,017 
C) $4,263 
D) $2,170 
A) $1,550 
B) $1,017 
C) $4,263 
D) $2,170

Question 19

Briefly discuss the restrictions and requirements on service organizations and not-for-profits that relate to joint cost allocation.

Accepted Answer

Service and not-for-profit organizations

Question 20

The definition of a sunk cost is

Accepted Answer

A) a cost that cannot be recovered regardless of what happens. 
B) a cost that relates to money poured into the ground. 
C) considered the original cost of an item. 
D) also known as an opportunity cost. 
A) a cost that cannot be recovered regardless of what happens. 
B) a cost that relates to money poured into the ground. 
C) considered the original cost of an item. 
D) also known as an opportunity cost.

Scrap is defined as a

Net realizable value equals product sales revenue at split-off minus any costs necessary to prepare and dispose of the product.

Briefly discuss the six steps in the allocation process.

If incremental revenues beyond split-off are less than incremental costs,a product should be sold at the split-off point.

In a lumber mill,which of the following would most likely be considered a primary product?

Three types of products that result from a joint process are _________,_,and ______.

Net realizable value equals product sales revenue at split-off plus any costs necessary to prepare and dispose of the product.

Kilpatrick Company manufactures products A and B from a joint process.Sales value at split-off was $700,000 for 10,000 units of A,and $300,000 for 15,000 units of B.Using the sales value at split-off approach,joint costs that Kilpatrick allocated to A were $140,000.Total joint costs were

The primary distinction between by-products and scrap is the difference in volume produced.

Briefly discuss the restrictions and requirements on service organizations and not-for-profits that relate to joint cost allocation.

The definition of a sunk cost is

Introduction to Cost Accounting

Cost Terminology and Cost Behaviors

Predetermined Overhead Rates, Flexible Budgets, and Absorptionvariable Costing

Activity-Based Management and Activity-Based Costing

Job Order Costing

Process Costing

Standard Costing and Variance Analysis

The Master Budget

Break-Even Point and Cost-Volume-Profit Analysis

Relevant Information for Decision Making

Introduction to Cost Management Systems

Responsibility Accounting,support Department Allocations,and Transfer Pricing

Performance Measurement, balanced Scorecards, and Performance Rewards

Capital Budgeting

Managing Costs and Uncertainty

Implementing Quality Concepts

Inventory and Production Management

Emerging Management Practices

Filters

		Products
	X	Y	Z	Total
Units produced	20,000	20,000	10,000	50,000
Joint costs	?	?	?	$262,000
Sales value at
split-off	$300,000	$150,000	$10,000	$460,000

	Yards	Sales price per yard at split-off	Disposal cost per yard at split-off	Further processing per yard	Final sale price per yard
X	1,500	$6.00	$3.50	$1.00	$ 7.50
Y	2,200	9.00	5.00	3.00	11.25

	Barrels	Sales price per barrel at split-off	Disposal cost per barrel at split-off	Further processing costs	Final sales price per barrel
C	750	$10.00	$6.50	$2.00	$13.50
D	1,000	8.00	4.00	2.50	10.00
E	1,400	11.00	7.00	4.00	15.50
G	2,000	15.00	9.50	4.50	19.50

	Pounds	Sales price per lb. at split-off	Disposal cost per lb. at split-off	Further processing per pound	Final sales price per pound
A	800	$6.50	$3.00	$2.00	$ 7.50
B	1,100	8.25	4.20	3.00	10.00
C	1,500	8.00	4.00	3.50	10.50

	Dept 1	Dept 2	Dept 3	Dept 4
Cost Incurred:	$90,000	$10,000	$8,000	$10,000
Production:
A	10,000 lbs.
B	20,000 lbs.
C	10,000 lbs.

Selling Price:
A	$10/lb.
B	$5/lb.
C	$2/lb.

Exam 11: Allocation of Joint Costs and Accounting for By-Products

Scrap is defined as a

Net realizable value equals product sales revenue at split-off minus any costs necessary to prepare and dispose of the product.

Briefly discuss the six steps in the allocation process.

If incremental revenues beyond split-off are less than incremental costs,a product should be sold at the split-off point.

In a lumber mill,which of the following would most likely be considered a primary product?

Three types of products that result from a joint process are _____________,_________,and __________.

Net realizable value equals product sales revenue at split-off plus any costs necessary to prepare and dispose of the product.

Kilpatrick Company manufactures products A and B from a joint process.Sales value at split-off was $700,000 for 10,000 units of A,and $300,000 for 15,000 units of B.Using the sales value at split-off approach,joint costs that Kilpatrick allocated to A were $140,000.Total joint costs were

The primary distinction between by-products and scrap is the difference in volume produced.

Briefly discuss the restrictions and requirements on service organizations and not-for-profits that relate to joint cost allocation.

The definition of a sunk cost is

Introduction to Cost Accounting

Cost Terminology and Cost Behaviors

Predetermined Overhead Rates, Flexible Budgets, and Absorptionvariable Costing

Activity-Based Management and Activity-Based Costing

Job Order Costing

Process Costing

Standard Costing and Variance Analysis

The Master Budget

Break-Even Point and Cost-Volume-Profit Analysis

Relevant Information for Decision Making

Introduction to Cost Management Systems

Responsibility Accounting,support Department Allocations,and Transfer Pricing

Performance Measurement, balanced Scorecards, and Performance Rewards

Capital Budgeting

Managing Costs and Uncertainty

Implementing Quality Concepts

Inventory and Production Management

Emerging Management Practices

Filters

Three types of products that result from a joint process are _________,_,and ______.