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

Three types of products that result from a joint process are _________________________, ____________________, and ____________________.

Ellis Company Ellis Company produces two products from a joint process: X and Z. Joint processing costs for this production cycle are $8,000. If X and Z are processed further, no disposal costs will be incurred or such costs will be borne by the buyer. Refer to Ellis Company. Using sales value at split-off, what amount of joint processing cost is allocated to Product Z (round to the nearest dollar)?

The net realizable value approach is normally used when the NRV is expected to be

The relative sales value method requires a common physical unit for measuring the output of each product.

Which of the following statements is true regarding by-products or scrap?

Ellis Company Ellis Company produces two products from a joint process: X and Z. Joint processing costs for this production cycle are $8,000. If X and Z are processed further, no disposal costs will be incurred or such costs will be borne by the buyer. Refer to Ellis Company. Which products would be processed further?

Chambers Company Chambers Company produces only two products and incurs joint processing costs that total $3,750. Products Alpha and Beta are produced in the following quantities during each month: 4,500 and 6,000 gallons, respectively. Chambers Company also runs one ad each month that advertises both products at a cost of $1,500. The selling price per gallon for the two products are $20 and $17.50, respectively. Refer to Chambers Company. What amount of advertising cost is allocated to each product based on sales value?

Davis Company Davis Company produces three products: A, B, and C from the same process. Joint costs for this production run are $2,100. If the products are processed further, Davis Company will incur the following disposal costs upon sale: A, $3.00; B, $2.00; and C, $1.00. Refer to Davis Company. Using net realizable value at split-off, what amount of joint processing cost is allocated to Product A (round to the nearest dollar)?

Joint costs may be allocated to main products, but not to by-products.

Joint costs occur after the split-off point in a production process.

The primary distinction between by-products and scrap is the difference in sales value.

Joint costs occur before the split-off point in a production process.

Under the net realizable value approach, no value is recognized for by-products or scrap until they are actually sold.

Allocating joint costs based upon a physical measure ignores the revenue-generating ability of individual products.

The point at which individual products are first identifiable in a joint process is referred to as the _________________________.

Brite Surface Company Brite Surface 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.) If Brite Surface 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 Brite Surface Company. Using a physical measurement method, what amount of joint processing cost is allocated to Product D?

Davis Company Davis Company produces three products: A, B, and C from the same process. Joint costs for this production run are $2,100. If the products are processed further, Davis Company will incur the following disposal costs upon sale: A, $3.00; B, $2.00; and C, $1.00. Refer to Davis Company. Using net realizable value at split-off, what amount of joint processing cost is allocated to Product C (round to the nearest dollar)?

Johnson Company Ellis Company produces two products from a joint process: A and C. Joint processing costs for this production cycle are $9,000. If A and C are processed further, no disposal costs will be incurred or such costs will be borne by the buyer. Refer to Johnson Company. Using approximated net realizable value at split-off, what amount of joint processing cost is allocated to Product C (round to the nearest dollar)?

Ellis Company Ellis Company produces two products from a joint process: X and Z. Joint processing costs for this production cycle are $8,000. If X and Z are processed further, no disposal costs will be incurred or such costs will be borne by the buyer. Refer to Ellis Company. Using approximated net realizable value at split-off, what amount of joint processing cost is allocated to Product X (round to the nearest dollar)?

Brite Surface Company Brite Surface 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.) If Brite Surface 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 Brite Surface Company. Using net realizable value at split-off, what amount of joint processing cost is allocated to Product C?