Question 1

Match each of the following costs with the appropriate joint production process cost classification.
-Raw milk for dairy processing

Accepted Answer

A)  scrap 
B)  main product 
C)  byproduct 
D)  joint product 
A)  scrap 
B)  main product 
C)  byproduct 
D)  joint product

Question 2

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 net realizable value when production is completed. The company uses FIFO for the inventory flow assumption.
2. Prepare the journal entry to record the byproduct sales.

Accepted Answer

The answer of Helen Company processes 30,000 litres of direct...

Question 3

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 4

In each of the following industries, identify possible joint (or severable) products at the splitoff point.
a. Coal
b. Petroleum
c. Dairy
d. Lamb
e. Lumber
f. Cocoa Beans
g. Christmas Trees
h. Salt
i. Cowhide

Accepted Answer

a. Coke, Gas, Benzole, Tar, Ammonia
b. C

Question 5

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 sales value at the splitoff point?

Accepted Answer

A)  $120 
B)  $1,160 
C)  $1,200 
D)  $1,950 
E)  $3,000 
A)  $120 
B)  $1,160 
C)  $1,200 
D)  $1,950 
E)  $3,000

Question 6

Which of the following is FALSE concerning manufacturing of joint products and joint costing?

Accepted Answer

A)  The number of outputs produced may exceed the number of products. 
B)  An output from the process may be recycled without any value being added by its production. 
C)  Some outputs from a joint process have no value and are not recognized in the accounting system. 
D)  The physical quantity of outputs not recognized in the accounting system, can exceed the quantities of outputs that recognized in the accounting system. 
E)  Joint processes always yield either scrap or byproducts. 
A)  The number of outputs produced may exceed the number of products. 
B)  An output from the process may be recycled without any value being added by its production. 
C)  Some outputs from a joint process have no value and are not recognized in the accounting system. 
D)  The physical quantity of outputs not recognized in the accounting system, can exceed the quantities of outputs that recognized in the accounting system. 
E)  Joint processes always yield either scrap or byproducts.

Question 7

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 8

Match each of the following costs with the appropriate joint production process cost classification.
-Sawdust from a sawmill

Accepted Answer

A)  scrap 
B)  main product 
C)  byproduct 
D)  joint product 
A)  scrap 
B)  main product 
C)  byproduct 
D)  joint product

Question 9

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 10

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 a physical volume measure, what is the approximate amount of joint costs that will be allocated to Mr. DirtOut and Mr. SinkClean?

Accepted Answer

A)  $231,116 and $148,884 
B)  $224,200 and $155,800 
C)  $227,202 and $152,798 
D)  $155,800 and $224,200 
E)  $148,884 and $231,116 
A)  $231,116 and $148,884 
B)  $224,200 and $155,800 
C)  $227,202 and $152,798 
D)  $155,800 and $224,200 
E)  $148,884 and $231,116

Question 11

Use the information below to answer the following question(s).
Beverage Drink Company processes direct materials up to the splitoff point, where two products, A and B, are obtained. The following information was collected for the month of July:
Direct materials processed: 2,500 litres (with 20 percent shrinkage)
   Cost of purchasing 2,500 litres of direct materials and processing it up to the splitoff point to yield a total of 2,000 litres of good products was $4,500. There were no inventory balances of A and B.
Product A may be processed further to yield 1,375 litres of Product Z5 for an additional processing cost of $150. Product Z5 is sold for $25.00 per litre. There was no beginning inventory and ending inventory was 125 litres.
Product B may be processed further to yield 375 litres of Product W3 for an additional processing cost of $275. Product W3 is sold for $30.00 per litre. There was no beginning inventory and ending inventory was 25 litres.
-What is Product Z5's estimated net realizable value?

Accepted Answer

A)  $11,100 
B)  $22,350 
C)  $34,225 
D)  $34,375 
E)  $34,525 
A)  $11,100 
B)  $22,350 
C)  $34,225 
D)  $34,375 
E)  $34,525

Question 12

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 13

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 14

Yip 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 May:
 
The cost of purchasing 100 trees and processing them up to the splitoff point to yield 70,000 sheets of paper and 60,000 pencil casings is $3,000.
Yip's Manufacturing's accounting department reported no beginning inventories and an ending inventory of 2,000 sheets of paper.
What are the paper's and the pencils' approximate weighted cost proportions using the sales value at splitoff method, respectively?

Accepted Answer

A)  50.00% and 50.00% 
B)  33.33% and 66.67% 
C)  31.82% and 68.18% 
D)  54.00% and 46.00% 
E)  53.00% and 47.00% 
A)  50.00% and 50.00% 
B)  33.33% and 66.67% 
C)  31.82% and 68.18% 
D)  54.00% and 46.00% 
E)  53.00% and 47.00%

Question 15

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:
   
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 is the joint cost allocation to product U using the sales value at splitoff method?

Accepted Answer

A)  $1,218,750 
B)  $731,250 
C)  $1,248,876 
D)  $701,124 
E)  $1,026,285 
A)  $1,218,750 
B)  $731,250 
C)  $1,248,876 
D)  $701,124 
E)  $1,026,285

Question 16

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 17

Framingham Ltd. produces three products out of a common process. The company currently uses the physical measures method to allocate joint costs to the three product lines: Leonid (L), Madagascar, (M) and Napoleon (N). The manager of the Napoleon product line is particularly disgruntled. He believes that his product line is allocated a disproportionate share of joint costs. In a recent managers' meeting, he argued that the company should consider using sales value as splitoff as the joint cost allocation method. He stated that his product is sold in a highly competitive market and increasing price is not an option.
The manager of the Leonid product line disagreed strongly. He stated that all products are sold in a competitive market place and that allocating joint costs on physical measures was simple and easily verifiable. The manager of the Madagascar product line sat quietly through the meeting and she did not seem to favour one method over the other.
As the assistant controller, you were asked by the controller to look into the concerns of the product line managers. The following additional information is available:
Product Line Physical Volume Unit Selling Price
   
Required:
As the assistant controller, prepare a report to the controller.

Accepted Answer

@#IMG-DLM& 
 @#IMG-DLM& 
From the gross margin calculations,

Match each of the following costs with the appropriate joint production process cost classification. -Raw milk for dairy processing

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

In each of the following industries, identify possible joint (or severable) products at the splitoff point. a. Coal b. Petroleum c. Dairy d. Lamb e. Lumber f. Cocoa Beans g. Christmas Trees h. Salt i. Cowhide

Which of the following is FALSE concerning manufacturing of joint products and joint costing?

The incremental benefit or (loss) of processing Jarlon into Jaxton is

Match each of the following costs with the appropriate joint production process cost classification. -Sawdust from a sawmill

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

The incremental benefit or (loss) of processing Kharton into Kraxton is

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

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

Match each of the following costs with the appropriate joint production process cost classification. -Raw milk for dairy processing

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

In each of the following industries, identify possible joint (or severable) products at the splitoff point. a. Coal b. Petroleum c. Dairy d. Lamb e. Lumber f. Cocoa Beans g. Christmas Trees h. Salt i. Cowhide

Which of the following is FALSE concerning manufacturing of joint products and joint costing?

The incremental benefit or (loss) of processing Jarlon into Jaxton is

Match each of the following costs with the appropriate joint production process cost classification. -Sawdust from a sawmill

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

The incremental benefit or (loss) of processing Kharton into Kraxton is

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

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