Question 1

If managers make processing or selling decisions using incremental revenue/incremental cost approach,which of the following statements is TRUE?

Accepted Answer

A) The resulting budgeted product-line income statement under the sales value at splitoff method,will show each product to have a positive operating income. 
B) The resulting budgeted product-line income statement under the physical measure method,will show each product to have a positive operating income. 
C) The resulting budgeted product-line income statement under the constant gross margin NRV method,will show each product to have a positive (or zero)operating income. 
D) Estimated net realizable method the resulting budgeted product-line income statement under the estimated NRV method,will show each product to have a zero operating income. 
E) The resulting budgeted product-line income statement under the sales value at splitoff method,will show each product to have a negative operating income. 
A) The resulting budgeted product-line income statement under the sales value at splitoff method,will show each product to have a positive operating income. 
B) The resulting budgeted product-line income statement under the physical measure method,will show each product to have a positive operating income. 
C) The resulting budgeted product-line income statement under the constant gross margin NRV method,will show each product to have a positive (or zero)operating income. 
D) Estimated net realizable method the resulting budgeted product-line income statement under the estimated NRV method,will show each product to have a zero operating income. 
E) The resulting budgeted product-line income statement under the sales value at splitoff method,will show each product to have a negative operating income.

Question 2

A sound reason for reporting revenue from byproducts as an income statement item at the time of sale is to lessen the chance of managers managing reported earnings.

Accepted Answer

A) True 
 B)False

Question 3

Explain the difference between a joint product and a byproduct.Can a byproduct ever become a joint product?

Accepted Answer

The differentiating factor between a joi

Question 4

Which of the following statements is TRUE concerning the practice of carrying inventories at NRV?

Accepted Answer

A) It is an inevitable result of joint cost allocation. 
B) It results for the NRV method of joint cost allocation. 
C) It results from the constant gross margin of NRV method. 
D) It is a widely accepted practice. 
E) It results in income recognition before sales are made. 
A) It is an inevitable result of joint cost allocation. 
B) It results for the NRV method of joint cost allocation. 
C) It results from the constant gross margin of NRV method. 
D) It is a widely accepted practice. 
E) It results in income recognition before sales are made.

Question 5

CSI Chemical,Inc.processes pine rosin into three products;turpentine,paint thinner,and spot remover.During May the joint costs of processing were $240,000.Production and sales value information for the month were as follows:
   
Required:
Determine the amount of joint cost allocated to each product if the sales value at splitoff method is used.

Accepted Answer

The answer of CSI Chemical,Inc.processes pine rosin into three products;turpentine,paint...

Question 6

Use the information below to answer the following question(s).
Raynor Manufacturing purchases trees from Tree Nursery and processes them up to the splitoff point,where two products (paper and pencil casings)are obtained.The products are then sold to an independent company that markets and distributes them to retail outlets.The following information was collected for the month of October.
Trees processed:
50 trees (yield is 30,000 sheets of paper and 30,000 pencil casings and no scrap)
   Cost of purchasing 50 trees and processing them up to the splitoff point to yield 30,000 sheets of paper and 30,000 pencil casings is $1,500.
Raynor Manufacturing's accounting department reported no beginning inventories;however,ending inventory amounts reflected 1,000 sheets of paper in stock.
-What is the paper's production approximate cost per unit if the sales value at splitoff method is used?

Accepted Answer

A) $0.0143 
B) $0.0150 
C) $0.0250 
D) $0.0259 
E) $0.0300 
A) $0.0143 
B) $0.0150 
C) $0.0250 
D) $0.0259 
E) $0.0300

Question 7

It is easier to cost inventory if the joint products are sold before the splitoff point without further processing.

Accepted Answer

A) True 
 B)False

Question 8

Answer the following question(s)using the information below:
The Morton Company processes unprocessed goat milk up to the splitoff point where two products,condensed goat milk and skim goat milk result.The following information was collected for the month of October:
Direct materials processed: 65,000 litres (shrinkage was 10%)
   The costs of purchasing the 65,000 litres of unprocessed goat milk and processing it up to the splitoff point to yield a total of 58,500 litres of salable product was $72,240.There were no inventory balances of either product.
Condensed goat milk may be processed further to yield 19,500 litres (the remainder is shrinkage)of a medicinal milk product,Xyla,for an additional processing cost of $3 per usable litre.Xyla can be sold for $18 per litre.
Skim goat milk can be processed further to yield 28,100 litres of skim goat ice cream,for an additional processing cost per usable litre of $2.50.The product can be sold for $9 per litre.
There are no beginning and ending inventory balances.
-Using the sales value at splitoff method,what is the gross margin percentage for condensed goat milk at the splitoff point?

Accepted Answer

A) 21.1% 
B) 55.1% 
C) 58.1% 
D) 38.2% 
E) 41.9% 
A) 21.1% 
B) 55.1% 
C) 58.1% 
D) 38.2% 
E) 41.9%

Question 9

Use the information below to answer the following question(s).
Cranbrook Chemical Ltd.manufactures two industrial compounds.In the month of May,15,000 litres of direct material costing $160,000 were processed at a cost of $400,000.The joint process yielded 16,000 containers of a compound known as Jarlon and 4,000 containers of a compound known as Kharton.The respective selling prices of Jarlon and Kharton are $38 and $58.Both products may be processed further.Jarlon may be processed into Jaxton at an incremental cost of $8 per jar of the final product while Kharton may be processed into Kraxton at an additional cost of $32 per jar of the final product.The volume of jars of the final product are: 12,000 and 3,000 for Jaxton and Kraxton respectively.The selling price of Jaxton is $48 per jar.The selling price of Kraxton is $102 per jar.
-Using the sales value at splitoff method,the joint costs allocated to Jarlon would be

Accepted Answer

A) $289,520. 
B) $115,808. 
C) $405,328. 
D) $110,480. 
E) $154,672. 
A) $289,520. 
B) $115,808. 
C) $405,328. 
D) $110,480. 
E) $154,672.

Question 10

AllCanada Wire Products processes copper into wire.It makes 12 gauge and 14 gauge wire.During April the joint costs of processing the aluminium were $365,000.There were no beginning or ending inventories for the month.Production and sales value information for the month were as follows:
   
Required:
Determine the amount of joint costs allocated to each product if the constant gross margin percentage of NRV method is used.

Accepted Answer

The answer of AllCanada Wire Products processes copper into wire.It...

Question 11

Use the information below to answer the following question(s).
Raynor Manufacturing purchases trees from Tree Nursery and processes them up to the splitoff point,where two products (paper and pencil casings)are obtained.The products are then sold to an independent company that markets and distributes them to retail outlets.The following information was collected for the month of October.
Trees processed:
50 trees (yield is 30,000 sheets of paper and 30,000 pencil casings and no scrap)
   Cost of purchasing 50 trees and processing them up to the splitoff point to yield 30,000 sheets of paper and 30,000 pencil casings is $1,500.
Raynor Manufacturing's accounting department reported no beginning inventories;however,ending inventory amounts reflected 1,000 sheets of paper in stock.
-What is the approximate production cost per unit for each pencil casing if the sales value at splitoff method is used?

Accepted Answer

A) $0.0250 
B) $0.0255 
C) $0.0335 
D) $0.0357 
E) $0.0533 
A) $0.0250 
B) $0.0255 
C) $0.0335 
D) $0.0357 
E) $0.0533

Question 12

The constant gross margin percentage method differs from market based joint cost allocation method (sales value at splitoff and estimated net realizable value)since no account is taken of profits earned before or after the splitoff point when allocating joint costs.

Accepted Answer

A) True 
 B)False

Question 13

Which statement is NOT true regarding the sales method of accounting for byproducts?

Accepted Answer

A) The method makes no journal entries until the byproduct is sold. 
B) This method is the preferred method because of the matching principle. 
C) Revenues of the byproduct can be recorded in the income statement as revenue. 
D) Revenues of the byproduct are not recorded at the time of production. 
E) No value is attached to the byproduct inventory. 
A) The method makes no journal entries until the byproduct is sold. 
B) This method is the preferred method because of the matching principle. 
C) Revenues of the byproduct can be recorded in the income statement as revenue. 
D) Revenues of the byproduct are not recorded at the time of production. 
E) No value is attached to the byproduct inventory.

Question 14

Use the information below to answer the following question(s).
Raynor Manufacturing purchases trees from Tree Nursery and processes them up to the splitoff point,where two products (paper and pencil casings)are obtained.The products are then sold to an independent company that markets and distributes them to retail outlets.The following information was collected for the month of October.
Trees processed:
50 trees (yield is 30,000 sheets of paper and 30,000 pencil casings and no scrap)
   Cost of purchasing 50 trees and processing them up to the splitoff point to yield 30,000 sheets of paper and 30,000 pencil casings is $1,500.
Raynor Manufacturing's accounting department reported no beginning inventories;however,ending inventory amounts reflected 1,000 sheets of paper in stock.
-What are the paper's and the pencil's approximate weighted cost proportions using the sales value at splitoff method,respectively?

Accepted Answer

A) 28.57% and 71.43% 
B) 33.33% and 66.67% 
C) 40% and 60% 
D) 49.00% and 51.00% 
E) 50.00% and 50.00% 
A) 28.57% and 71.43% 
B) 33.33% and 66.67% 
C) 40% and 60% 
D) 49.00% and 51.00% 
E) 50.00% and 50.00%

Question 15

Use the information below to answer the following question(s).
Cranbrook Chemical Ltd.manufactures two industrial compounds.In the month of May,15,000 litres of direct material costing $160,000 were processed at a cost of $400,000.The joint process yielded 16,000 containers of a compound known as Jarlon and 4,000 containers of a compound known as Kharton.The respective selling prices of Jarlon and Kharton are $38 and $58.Both products may be processed further.Jarlon may be processed into Jaxton at an incremental cost of $8 per jar of the final product while Kharton may be processed into Kraxton at an additional cost of $32 per jar of the final product.The volume of jars of the final product are: 12,000 and 3,000 for Jaxton and Kraxton respectively.The selling price of Jaxton is $48 per jar.The selling price of Kraxton is $102 per jar.
-The incremental benefit or (loss)of processing Jarlon into Jaxton is

Accepted Answer

A) $480,000. 
B) ($128,000). 
C) $64,000. 
D) ($96,000). 
E) ($32,000). 
A) $480,000. 
B) ($128,000). 
C) $64,000. 
D) ($96,000). 
E) ($32,000).

Question 16

The juncture in a joint production process when two products become separable is the byproduct point.

Accepted Answer

A) True 
 B)False

Question 17

Answer the following questions using the information below:
Yakima Manufacturing purchases trees from Cheney Lumber and processes them up to the splitoff point where two products (paper and pencil casings)are obtained.The products are then sold to an independent company that markets and distributes them to retail outlets.The following information was collected for the month of November:
   The cost of purchasing 100 trees and processing them up to the splitoff point to yield 60,000 sheets of paper and 60,000 pencil casings is $3,000.
Yakima's accounting department reported no beginning inventories and an ending inventory of 2,000 sheets of paper.
-If the sales value at splitoff method is used,what are the approximate joint costs assigned to ending inventory for paper?

Accepted Answer

A) $28.58 
B) $100.00 
C) $870.00 
D) $1,500.00 
E) $80.00 
A) $28.58 
B) $100.00 
C) $870.00 
D) $1,500.00 
E) $80.00

Question 18

Which of the following is NOT a strategy for costing inventory when joint-cost circumstances are involved?

Accepted Answer

A) Allocate costs according to the market selling price. 
B) Allocate costs based on constant gross margin. 
C) Allocate costs according to a predetermined physical measure. 
D) Use the estimated net realizable value. 
E) Allocate costs according to the amount in the respective cost pools. 
A) Allocate costs according to the market selling price. 
B) Allocate costs based on constant gross margin. 
C) Allocate costs according to a predetermined physical measure. 
D) Use the estimated net realizable value. 
E) Allocate costs according to the amount in the respective cost pools.

Question 19

Separable costs are assignable after the splitoff point.

Accepted Answer

A) True 
 B)False

Question 20

The sales value at splitoff method can be used to value inventory as well as determining cost of goods sold.

Accepted Answer

A) True 
 B)False

If managers make processing or selling decisions using incremental revenue/incremental cost approach,which of the following statements is TRUE?

A sound reason for reporting revenue from byproducts as an income statement item at the time of sale is to lessen the chance of managers managing reported earnings.

Explain the difference between a joint product and a byproduct.Can a byproduct ever become a joint product?

Which of the following statements is TRUE concerning the practice of carrying inventories at NRV?

It is easier to cost inventory if the joint products are sold before the splitoff point without further processing.

The constant gross margin percentage method differs from market based joint cost allocation method (sales value at splitoff and estimated net realizable value)since no account is taken of profits earned before or after the splitoff point when allocating joint costs.

Which statement is NOT true regarding the sales method of accounting for byproducts?

The juncture in a joint production process when two products become separable is the byproduct point.

Which of the following is NOT a strategy for costing inventory when joint-cost circumstances are involved?

Separable costs are assignable after the splitoff point.

The sales value at splitoff method can be used to value inventory as well as determining cost of goods sold.

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

If managers make processing or selling decisions using incremental revenue/incremental cost approach,which of the following statements is TRUE?

A sound reason for reporting revenue from byproducts as an income statement item at the time of sale is to lessen the chance of managers managing reported earnings.

Explain the difference between a joint product and a byproduct.Can a byproduct ever become a joint product?

Which of the following statements is TRUE concerning the practice of carrying inventories at NRV?

It is easier to cost inventory if the joint products are sold before the splitoff point without further processing.

The constant gross margin percentage method differs from market based joint cost allocation method (sales value at splitoff and estimated net realizable value)since no account is taken of profits earned before or after the splitoff point when allocating joint costs.

Which statement is NOT true regarding the sales method of accounting for byproducts?

The juncture in a joint production process when two products become separable is the byproduct point.

Which of the following is NOT a strategy for costing inventory when joint-cost circumstances are involved?

Separable costs are assignable after the splitoff point.

The sales value at splitoff method can be used to value inventory as well as determining cost of goods sold.

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