Question 1

Which of the following statements is TRUE regarding main products,byproducts,and scrap?

Accepted Answer

A) Product classifications do not change over the short-run. 
B) Product classifications do not change over the long-run. 
C) Product classifications may change over time. 
D) The cause-and-effect criterion determines the classification. 
E) The distinctions between main products,byproducts,and scrap are well-established in practice. 
A) Product classifications do not change over the short-run. 
B) Product classifications do not change over the long-run. 
C) Product classifications may change over time. 
D) The cause-and-effect criterion determines the classification. 
E) The distinctions between main products,byproducts,and scrap are well-established in practice.

Question 2

Use the information below to answer the following question(s).
Chem Manufacturing Company processes direct materials up to the splitoff point,where two products (X and Y)are obtained and sold.The following information was collected for the month of November.
Direct materials processed:
10,000 litres (10,000 litres yield 9,500 litres of good product and 500 litres of shrinkage)
   The cost of purchasing 10,000 litres of direct materials and processing it up to the splitoff point to yield a total of 9,500 litres of good products was $975,000.
The beginning inventories totalled 50 litres for X and 25 litres for Y.Ending inventory amounts reflected 300 litres of product X and 525 litres of product Y.October costs were per unit were the same as November.
-What is the approximate amount of joint costs in Product Y's ending inventory if the physical volume method is used and the company uses the FIFO inventory method?

Accepted Answer

A) $50,917 
B) $53,883 
C) $60,145 
D) $60,285 
E) $67,358 
A) $50,917 
B) $53,883 
C) $60,145 
D) $60,285 
E) $67,358

Question 3

Which of the following entries is the initial entry to recognize a byproduct in the general ledger,based on the accounting method of recognizing byproducts at the time of production?

Accepted Answer

A)    
B)    
C)    
D)    
E)    
A)    
B)    
C)    
D)    
E)

Question 4

All of the following statements about the constant gross margin percentage of net realizable method are true EXCEPT

Accepted Answer

A) all products have equal gross margin percentages. 
B) it is based on a tenuous underlying assumption. 
C) the gross margin percentage remains the same regardless of the different amounts of separable costs. 
D) the gross margin is calculated by deducting all separable costs from revenue. 
E) some products may receive negative allocations of joint costs. 
A) all products have equal gross margin percentages. 
B) it is based on a tenuous underlying assumption. 
C) the gross margin percentage remains the same regardless of the different amounts of separable costs. 
D) the gross margin is calculated by deducting all separable costs from revenue. 
E) some products may receive negative allocations of joint costs.

Question 5

Red Sauce Canning Company processes tomatoes into catsup,tomato juice,and canned tomatoes.During the summer the joint costs of processing the tomatoes were $420,000.There was no beginning or ending inventories for the summer.Production and sales value information for the summer were as follows:
   
Required:
Determine the amount allocated to each product if the estimated net realizable value method is used and compute the cost per case for each product.

Accepted Answer

@#IMG-DLM& 
Catsup cost per case = $449,

Question 6

Answer the following question(s)using the information below.
The Oxnard Corporation processes a liquid component up to the splitoff point where two products,Mr.DirtOut and Mr.SinkClean,are produced and sold.There was no beginning inventory.The following material was collected for the month of January:
Direct materials processed: 250,000 litres (242,500 litres of good product)
   The cost of purchasing 250,000 litres of direct materials and processing it up to the splitoff point to yield a total of 242,500 litres of good product was $380,000.
-When using the physical measures method,what is Mr.DirtOut's approximate production cost per unit?

Accepted Answer

A) $1.52 
B) $1.54 
C) $1.57 
D) $1.61 
E) $1.01 
A) $1.52 
B) $1.54 
C) $1.57 
D) $1.61 
E) $1.01

Question 7

Using estimated net realizable value,what amount of the $72,240 of joint costs would be allocated Xyla and the skim goat ice cream?

Accepted Answer

A) $41,971 and $30,269 
B) $44,471 and $27,769 
C) $32,796 and $39,444 
D) $36,120 and $36,120 
E) $39,444 and $32,796 
A) $41,971 and $30,269 
B) $44,471 and $27,769 
C) $32,796 and $39,444 
D) $36,120 and $36,120 
E) $39,444 and $32,796

Question 8

Use the information below to answer the following question(s).
Chem Manufacturing Company processes direct materials up to the splitoff point,where two products (X and Y)are obtained and sold.The following information was collected for the month of November.
Direct materials processed:
10,000 litres (10,000 litres yield 9,500 litres of good product and 500 litres of shrinkage)
   The cost of purchasing 10,000 litres of direct materials and processing it up to the splitoff point to yield a total of 9,500 litres of good products was $975,000.
The beginning inventories totalled 50 litres for X and 25 litres for Y.Ending inventory amounts reflected 300 litres of product X and 525 litres of product Y.October costs were per unit were the same as November.
-What is product X's approximate gross margin percentage using the physical volume method?

Accepted Answer

A) 30% 
B) 32% 
C) 33% 
D) 35% 
E) 38% 
A) 30% 
B) 32% 
C) 33% 
D) 35% 
E) 38%

Question 9

A business which enters into a contract to purchase a product (or products)and will compensate the manufacturer under a cost reimbursement formula,should take an active part in the determination of how joint costs are allocated because

Accepted Answer

A) it is important in the understanding of the cause-and-effect relationship. 
B) if the manufacturer successfully allocates a large portion of its costs to these products then it will be able to sell its other nonreimbursed products at lower prices. 
C) the ASPE/IFRS requires the business to participate in the cost allocation process. 
D) they are used in the calculation of the suppliers inventoriable costs. 
E) sales discounts often depend on joint cost allocation amounts. 
A) it is important in the understanding of the cause-and-effect relationship. 
B) if the manufacturer successfully allocates a large portion of its costs to these products then it will be able to sell its other nonreimbursed products at lower prices. 
C) the ASPE/IFRS requires the business to participate in the cost allocation process. 
D) they are used in the calculation of the suppliers inventoriable costs. 
E) sales discounts often depend on joint cost allocation amounts.

Question 10

Under the benefits-received criterion,the physical measures method is less desirable that the sales value at splitoff method.

Accepted Answer

A) True 
 B)False

Question 11

BC Lumber processes timber into four products.During January the joint costs of processing were $280,000.There was no beginning inventory at the beginning of the month.Production and sales value information for the month were as follows:
   
Required:
Determine the value of ending inventory if the physical measures method is used for product costing.Round to 3 decimal places when necessary.

Accepted Answer

The answer of BC Lumber processes timber into four products.During...

Question 12

Two finished products,[A & B],are sold for $16 a unit and $24 a unit,respectively.Each product can also be sold at the splitoff point.Product A can be sold for $10 and Product B for $8.Joint costs for the two products totalled $8,000 for January for 600 units of A and 500 units of B.
What are the respective joint costs assigned to each unit of products A and B if the sales value at splitoff method is used?

Accepted Answer

A) $5.92 and $8.88 
B) $6.40 and $14.40 
C) $6.40 and $9.10 
D) $8.00 and $9.10 
E) $8.00 and $6.40 
A) $5.92 and $8.88 
B) $6.40 and $14.40 
C) $6.40 and $9.10 
D) $8.00 and $9.10 
E) $8.00 and $6.40

Question 13

If joint products end up with the same gross margin percentage,which of the following is TRUE?

Accepted Answer

A) The cost allocation method assigned the same cost per unit to each product. 
B) The physical measure method must have been used. 
C) The gross margin percentage NRV method must have been used. 
D) The estimated net realizable method must have been used. 
E) If all products are sold at the splitoff point,and there were no opening inventories,the sales value at splitoff method could have been used. 
A) The cost allocation method assigned the same cost per unit to each product. 
B) The physical measure method must have been used. 
C) The gross margin percentage NRV method must have been used. 
D) The estimated net realizable method must have been used. 
E) If all products are sold at the splitoff point,and there were no opening inventories,the sales value at splitoff method could have been used.

Question 14

What is the net effect to the income statement for the sale of byproduct,if byproducts are recognized at the point of sale?

Accepted Answer

A) $0 
B) $1,500 
C) $16,000 
D) $17,500 
E) $20,000 
A) $0 
B) $1,500 
C) $16,000 
D) $17,500 
E) $20,000

Question 15

Use the information below to answer the following question(s).
Chem Manufacturing Company processes direct materials up to the splitoff point,where two products (X and Y)are obtained and sold.The following information was collected for the month of November.
Direct materials processed:
10,000 litres (10,000 litres yield 9,500 litres of good product and 500 litres of shrinkage)
   The cost of purchasing 10,000 litres of direct materials and processing it up to the splitoff point to yield a total of 9,500 litres of good products was $975,000.
The beginning inventories totalled 50 litres for X and 25 litres for Y.Ending inventory amounts reflected 300 litres of product X and 525 litres of product Y.October costs were per unit were the same as November.
-What method is used when joint costs are allocated according to each item's relative proportion of weight at the splitoff point?

Accepted Answer

A) direct proportion method 
B) proportional value method 
C) physical measure method 
D) weighted sales value method 
E) constant margin method 
A) direct proportion method 
B) proportional value method 
C) physical measure method 
D) weighted sales value method 
E) constant margin method

Question 16

Paragon University operates an extensive and an expensive registration,testing,and counselling centre,through which all students are required to pass through when they enter the university.The registration effort's costs (for the most part)are almost impossible to allocate based upon which students require time,effort,etc.The cost of this centre is approximately 15% of the total costs of Paragon.This department engages in no other activities than the registration of students.Paragon is interested in determining the profitability of the three technical departments it operates.Paragon has the perception that some departments are more profitable than others,and it would like to determine an appropriate method of allocating the costs of this registration centre.
Required:
Recommend to Paragon University a method (or methods)of allocating the costs of registration to
the three departments.

Accepted Answer

The joint costs of the registration effo

Question 17

Processes that yield joint products always yield byproducts as well.

Accepted Answer

A) True 
 B)False

Question 18

Which of the following is NOT a reason to allocate joint cost?

Accepted Answer

A) rate regulation requirements,if applicable 
B) cost of goods sold computations 
C) insurance settlement cost information requirements 
D) customer profitability analysis 
E) cause-and-effect analysis 
A) rate regulation requirements,if applicable 
B) cost of goods sold computations 
C) insurance settlement cost information requirements 
D) customer profitability analysis 
E) cause-and-effect analysis

Question 19

The estimated net realizable value method allocates joint costs on the basis of the expected final sales value in the ordinary course of business,less the expected separable costs of production and marketing of the total production for the period.

Accepted Answer

A) True 
 B)False

Question 20

There are no logical reasons for allocating joint costs.

Accepted Answer

A) True 
 B)False

Which of the following statements is TRUE regarding main products,byproducts,and scrap?

Which of the following entries is the initial entry to recognize a byproduct in the general ledger,based on the accounting method of recognizing byproducts at the time of production?

All of the following statements about the constant gross margin percentage of net realizable method are true EXCEPT

Using estimated net realizable value,what amount of the $72,240 of joint costs would be allocated Xyla and the skim goat ice cream?

A business which enters into a contract to purchase a product (or products)and will compensate the manufacturer under a cost reimbursement formula,should take an active part in the determination of how joint costs are allocated because

Under the benefits-received criterion,the physical measures method is less desirable that the sales value at splitoff method.

If joint products end up with the same gross margin percentage,which of the following is TRUE?

What is the net effect to the income statement for the sale of byproduct,if byproducts are recognized at the point of sale?

Processes that yield joint products always yield byproducts as well.

Which of the following is NOT a reason to allocate joint cost?

The estimated net realizable value method allocates joint costs on the basis of the expected final sales value in the ordinary course of business,less the expected separable costs of production and marketing of the total production for the period.

There are no logical reasons for allocating joint costs.

The Accountants Vital Role in Decision Making

An Introduction to Cost Terms and Purposes

Cost-Volume-Profit Analysis

Job Costing

Activity-Based Costing and Management

Master Budget and Responsibility Accounting

Flexible Budgets,variances,and Management Control: I

Flexible Budgets,variances,and Management Control: II

Income Effects of Denominator Level on Inventory Valuation

Analysis of Cost Behaviour

Decision Making and Relevant Information

Pricing Decisions, product Profitability Decisions, and Cost Management

Strategy,balanced Scorecard,and Profitability Analysis

Period Cost Allocation

Revenue and Customer Profitability Analysis

Process Costing

Spoilage, rework, and Scrap

Inventory Cost Management Strategies

Capital Budgeting: Methods of Investment Analysis

Transfer Pricing and Multinational Management Control Systems

Multinational Performance Measurement and Compensation

Filters

Exam 15: Cost Allocation: Joint Products and Byproducts

Which of the following statements is TRUE regarding main products,byproducts,and scrap?

Which of the following entries is the initial entry to recognize a byproduct in the general ledger,based on the accounting method of recognizing byproducts at the time of production?

All of the following statements about the constant gross margin percentage of net realizable method are true EXCEPT

Using estimated net realizable value,what amount of the $72,240 of joint costs would be allocated Xyla and the skim goat ice cream?

A business which enters into a contract to purchase a product (or products)and will compensate the manufacturer under a cost reimbursement formula,should take an active part in the determination of how joint costs are allocated because

Under the benefits-received criterion,the physical measures method is less desirable that the sales value at splitoff method.

If joint products end up with the same gross margin percentage,which of the following is TRUE?

What is the net effect to the income statement for the sale of byproduct,if byproducts are recognized at the point of sale?

Processes that yield joint products always yield byproducts as well.

Which of the following is NOT a reason to allocate joint cost?

The estimated net realizable value method allocates joint costs on the basis of the expected final sales value in the ordinary course of business,less the expected separable costs of production and marketing of the total production for the period.

There are no logical reasons for allocating joint costs.

The Accountants Vital Role in Decision Making

An Introduction to Cost Terms and Purposes

Cost-Volume-Profit Analysis

Job Costing

Activity-Based Costing and Management

Master Budget and Responsibility Accounting

Flexible Budgets,variances,and Management Control: I

Flexible Budgets,variances,and Management Control: II

Income Effects of Denominator Level on Inventory Valuation

Analysis of Cost Behaviour

Decision Making and Relevant Information

Pricing Decisions, product Profitability Decisions, and Cost Management

Strategy,balanced Scorecard,and Profitability Analysis

Period Cost Allocation

Revenue and Customer Profitability Analysis

Process Costing

Spoilage, rework, and Scrap

Inventory Cost Management Strategies

Capital Budgeting: Methods of Investment Analysis

Transfer Pricing and Multinational Management Control Systems

Multinational Performance Measurement and Compensation

Filters