Question 1

The net realizable value approach is used to account for scrap and by-products when the net realizable value is insignificant.

Accepted Answer

A) True 
 B)False

Question 2

Kelly Company Kelly 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. Kelly Company has four categories of products as follows:
  Refer to Kelly Company. Assume that Kelly 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 3

Skinner Company produced three joint products at a joint cost of $100,000. These products were processed further and sold as follows:
   The company has had an opportunity to sell at split-off directly to other processors. If that alternative had been selected, sales would have been: A, $56,000; B, $28,000; and C, $56,000.
The company expects to operate at the same level of production and sales in the forthcoming year.
Required: Consider all the available information and assume that all costs incurred after split-off are variable.

Accepted Answer

The answer of Skinner Company produced three joint products at...

Question 4

Melbourne Company Melbourne Company manufactures three products in a joint process which costs $25,000. Each product can be sold at split-off or processed further and then sold. 10,000 units of each product are manufactured. The following information is available for the three products:
  Refer to Melbourne Company. To maximize profits, which products should Melbourne process further?

Accepted Answer

A)  Product A only 
B)  Product B only 
C)  Product C only 
D)  Products A, B, and C 
A)  Product A only 
B)  Product B only 
C)  Product C only 
D)  Products A, B, and C

Question 5

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 a physical measurement method, what amount of joint processing cost is allocated to Product A (round to the nearest dollar)?

Accepted Answer

A)  $700 
B)  $679 
C)  $927 
D)  $494 
A)  $700 
B)  $679 
C)  $927 
D)  $494

Question 6

The net realizable value approach requires that the net realizable value of by-products and scrap be treated as a reduction in joint costs allocated to primary products.

Accepted Answer

A) True 
 B)False

Question 7

Sun Glo Company Sun Glo 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. Sun Glo 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 Sun Glo Company. Assume that Sun Glo chooses to allocate its advertising cost among the three products. What amount of advertising cost is allocated to Product S using the floor space ratio?

Accepted Answer

A)  $911 
B)  $14,244 
C)  $13,333 
D)  $30,000 
A)  $911 
B)  $14,244 
C)  $13,333 
D)  $30,000

Question 8

Two incidental products of a joint process are ____________________ and ____________________.

Accepted Answer

The answer of Two incidental products of a joint process...

Question 9

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 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 10

Sun Glo Company Sun Glo 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. Sun Glo 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 Sun Glo Company. Assume that Sun Glo 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 11

Joint costs are allocated to joint products to

Accepted Answer

A)  obtain a cost per unit for financial statement purposes. 
B)  provide accurate management information on production costs of each type of product. 
C)  compute variances from expected costs for each joint product. 
D)  allow the use of high-low analysis by the company. 
A)  obtain a cost per unit for financial statement purposes. 
B)  provide accurate management information on production costs of each type of product. 
C)  compute variances from expected costs for each joint product. 
D)  allow the use of high-low analysis by the company.

Question 12

Sun Glo Company Sun Glo 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. Sun Glo 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 Sun Glo Company. Using gallons as the physical measurement, what amount of joint processing cost is allocated to Product T?

Accepted Answer

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

Question 13

Which of the following is a false statement about scrap and by-products?

Accepted Answer

A)  Both by-products and scrap are salable. 
B)  A by-product has a higher sales value than does scrap. 
C)  By-products and scrap are the primary reason that management undertakes the joint process. 
D)  Both scrap and by-products are incidental outputs to the joint process. 
A)  Both by-products and scrap are salable. 
B)  A by-product has a higher sales value than does scrap. 
C)  By-products and scrap are the primary reason that management undertakes the joint process. 
D)  Both scrap and by-products are incidental outputs to the joint process.

The net realizable value approach is used to account for scrap and by-products when the net realizable value is insignificant.

The net realizable value approach requires that the net realizable value of by-products and scrap be treated as a reduction in joint costs allocated to primary products.

Two incidental products of a joint process are and .

Joint costs are allocated to joint products to

Which of the following is a false statement about scrap and by-products?

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

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

The net realizable value approach is used to account for scrap and by-products when the net realizable value is insignificant.

The net realizable value approach requires that the net realizable value of by-products and scrap be treated as a reduction in joint costs allocated to primary products.

Two incidental products of a joint process are ____________________ and ____________________.

Joint costs are allocated to joint products to

Which of the following is a false statement about scrap and by-products?

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

Two incidental products of a joint process are and .