Question 1

The method of allocating joint product costs is an important guide for other management decisions.

Accepted Answer

A) True 
 B)False

Question 2

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 Kharton into Kraxton is

Accepted Answer

A) $74,000. 
B) $22,000. 
C) ($22,000). 
D) ($96,000). 
E) $170,000. 
A) $74,000. 
B) $22,000. 
C) ($22,000). 
D) ($96,000). 
E) $170,000.

Question 3

All of the following methods may be used to allocate joint costs EXCEPT the

Accepted Answer

A) constant gross margin percentage NRV method. 
B) estimated net realizable value method. 
C) present value allocation method. 
D) sales value at splitoff method. 
E) physical measure method. 
A) constant gross margin percentage NRV method. 
B) estimated net realizable value method. 
C) present value allocation method. 
D) sales value at splitoff method. 
E) physical measure method.

Question 4

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 is the approximate production cost for each pencil casing?

Accepted Answer

A) $0.0250 
B) $0.0255 
C) $0.0335 
D) $0.0357 
E) $0.0422 
A) $0.0250 
B) $0.0255 
C) $0.0335 
D) $0.0357 
E) $0.0422

Question 5

If the value of a byproduct rises significantly,it could also be viewed as a joint product.

Accepted Answer

A) True 
 B)False

Question 6

Products with a zero sales value are known as

Accepted Answer

A) scrap. 
B) main products. 
C) joint products. 
D) byproducts. 
E) separable products. 
A) scrap. 
B) main products. 
C) joint products. 
D) byproducts. 
E) separable products.

Question 7

Different joint cost allocation methods will result in different product margin percentages for the individual products.

Accepted Answer

A) True 
 B)False

Question 8

Advantages of the sales value at splitoff method include all of the following EXCEPT

Accepted Answer

A) it does not presuppose an exact number of subsequent steps for further processing. 
B) it uses a meaningful denominator. 
C) there is no anticipation of subsequent management decisions. 
D) it is simple. 
E) the allocation of joint costs could lead managers to make poor decisions. 
A) it does not presuppose an exact number of subsequent steps for further processing. 
B) it uses a meaningful denominator. 
C) there is no anticipation of subsequent management decisions. 
D) it is simple. 
E) the allocation of joint costs could lead managers to make poor decisions.

Question 9

Use the information below to answer the following questions:
Argon Manufacturing Company processes direct materials up to the splitoff point where two products (U and V)are obtained and sold.The following information was collected for last quarter of the calendar year:
Direct materials processed: 20,000 gallons (20,000 gallons yield 19,000 gallons of good product and 1,000 gallons of shrinkage)
   The cost of purchasing 20,000 gallons of direct materials and processing it up to the splitoff point to yield a total of 19,000 gallons of good products was $1,950,000.
Beginning inventories totaled 100 gallons for U and 50 gallons for V.Ending inventory amounts reflected 600 gallons of Product U and 1,050 gallons of Product V.October costs per unit were the same as November.
-What are the physical-volume proportions for products U and V,respectively?

Accepted Answer

A) 47.37% and 53.63% 
B) 55.00% and 45.00% 
C) 52.63% and 47.37% 
D) 54.00% and 46.00% 
E) 46.00% and 54.00% 
A) 47.37% and 53.63% 
B) 55.00% and 45.00% 
C) 52.63% and 47.37% 
D) 54.00% and 46.00% 
E) 46.00% and 54.00%

Question 10

The decision of whether to process products beyond the splitoff process should be based on which of the following?

Accepted Answer

A) revenue analysis 
B) relevant cost analysis 
C) production cost analysis 
D) gross margin analysis 
E) incremental operating income attainable beyond the splitoff point 
A) revenue analysis 
B) relevant cost analysis 
C) production cost analysis 
D) gross margin analysis 
E) incremental operating income attainable beyond the splitoff point

Question 11

Helen Company processes 30,000 litres of direct materials to produce two products,Zander and Ifso.Zander,a byproduct,sells for $5 per litre,and Ifso,the main product,sells for $70 per litre.The following information is for July:
   
The manufacturing costs totalled $145,000;beginning inventory $3,000.
Required:
1.Prepare a July income statement assuming that Helen Company recognizes the byproduct revenue at the time of sale.The company uses FIFO for the inventory flow assumption.
2.Prepare the journal entry to record the byproduct sales.

Accepted Answer

1.Income statement
 @#IMG-DLM& 
Ending i

Question 12

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 NRV method,the amount of joint costs allocated to Jaxton is

Accepted Answer

A) $170,408. 
B) $278,280. 
C) $121,720. 
D) $389,592. 
E) $111,312. 
A) $170,408. 
B) $278,280. 
C) $121,720. 
D) $389,592. 
E) $111,312.

Question 13

Purple Paper Company processes wood pulp into two products.During July the joint costs of processing were $50,000.Production and sales value information for the month were as follows:
   
Paper sells for $2.71 a kilogram and cardboard sells for $3.10 a kilogram.
There were no beginning or ending inventories for July.
Required:
   
2.Should management process these products beyond the splitoff point? Justify your answer.Also comment on how this decision would be affected by the results of the expected profits using the constant gross margin percentage of NRV and physical measure methods.

Accepted Answer

@#IMG-DLM& 
 @#IMG-DLM& 
2.The paper product has a post spli

Question 14

Calamata Corporation processes a single material into three separate products A,B,and C.During September,the joint costs of processing were $300,000.Production and sales value information for the month were as follows:
   
Required:
Determine the amount of joint cost allocated to each product if the constant gross margin percentage of NRV method is used.

Accepted Answer

The gross margin per

Question 15

List three reasons why we allocate joint costs to individual products or services.Give an example of when the particular cost allocation reason would come into use.

Accepted Answer

a.For inventory costing,and cost of good

Question 16

Which of the following is NOT a reason underlying the importance of allocations for inventory costing and cost of goods sold computations?

Accepted Answer

A) Inventory costing is essential for proper balance sheet presentation. 
B) Divisional profitability may affect compensation for divisional managers. 
C) Cost of goods sold is an important component in the determination of net income. 
D) The information may be required for insurance settlement or litigation. 
E) Sell work-in -process or process further decisions prior to the splitoff point. 
A) Inventory costing is essential for proper balance sheet presentation. 
B) Divisional profitability may affect compensation for divisional managers. 
C) Cost of goods sold is an important component in the determination of net income. 
D) The information may be required for insurance settlement or litigation. 
E) Sell work-in -process or process further decisions prior to the splitoff point.

Question 17

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.
-What is the estimated net realizable value of Xyla at the splitoff point?

Accepted Answer

A) $182,650 
B) $252,900 
C) $292,500 
D) $351,000 
E) $280,750 
A) $182,650 
B) $252,900 
C) $292,500 
D) $351,000 
E) $280,750

Question 18

When a single manufacturing process yields two products,one of which has a relatively high sales value compared to the other,the two products are respectively known as

Accepted Answer

A) joint products and byproducts. 
B) joint products and scrap. 
C) main products and byproducts. 
D) main products and joint products. 
E) byproducts and scrap. 
A) joint products and byproducts. 
B) joint products and scrap. 
C) main products and byproducts. 
D) main products and joint products. 
E) byproducts and scrap.

Question 19

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 portion of the joint costs that should be allocated to products X and Y,respectively,using a physical volume measure?

Accepted Answer

A) $461,858 and $513,142 
B) $487,500 and $487,500 
C) $513,142 and $461,858 
D) $529,285 and $445,715 
E) $530,000 and $470,000 
A) $461,858 and $513,142 
B) $487,500 and $487,500 
C) $513,142 and $461,858 
D) $529,285 and $445,715 
E) $530,000 and $470,000

Question 20

What is the reason that accountants do not like to carry inventory at net realizable value?

Accepted Answer

A) it is the most difficult costing method 
B) income is recognized after the sale is complete 
C) income is recognized before sales are made 
D) it is never acceptable to the taxing authorities 
E) it is more difficult to count the inventory when carrying cost is different than purchase cost 
A) it is the most difficult costing method 
B) income is recognized after the sale is complete 
C) income is recognized before sales are made 
D) it is never acceptable to the taxing authorities 
E) it is more difficult to count the inventory when carrying cost is different than purchase cost

The method of allocating joint product costs is an important guide for other management decisions.

All of the following methods may be used to allocate joint costs EXCEPT the

If the value of a byproduct rises significantly,it could also be viewed as a joint product.

Products with a zero sales value are known as

Different joint cost allocation methods will result in different product margin percentages for the individual products.

Advantages of the sales value at splitoff method include all of the following EXCEPT

The decision of whether to process products beyond the splitoff process should be based on which of the following?

List three reasons why we allocate joint costs to individual products or services.Give an example of when the particular cost allocation reason would come into use.

Which of the following is NOT a reason underlying the importance of allocations for inventory costing and cost of goods sold computations?

When a single manufacturing process yields two products,one of which has a relatively high sales value compared to the other,the two products are respectively known as

What is the reason that accountants do not like to carry inventory at net realizable value?

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

The method of allocating joint product costs is an important guide for other management decisions.

All of the following methods may be used to allocate joint costs EXCEPT the

If the value of a byproduct rises significantly,it could also be viewed as a joint product.

Products with a zero sales value are known as

Different joint cost allocation methods will result in different product margin percentages for the individual products.

Advantages of the sales value at splitoff method include all of the following EXCEPT

The decision of whether to process products beyond the splitoff process should be based on which of the following?

List three reasons why we allocate joint costs to individual products or services.Give an example of when the particular cost allocation reason would come into use.

Which of the following is NOT a reason underlying the importance of allocations for inventory costing and cost of goods sold computations?

When a single manufacturing process yields two products,one of which has a relatively high sales value compared to the other,the two products are respectively known as

What is the reason that accountants do not like to carry inventory at net realizable value?

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