Question 1

What are the two methods to account for byproducts. Which is the more appropriate method to use and why?

Accepted Answer

The two methods are the production metho

Question 2

Which of the following reasons explain why a physical-measure to allocate joint costs is less preferred than the sales value at split-off point?

Accepted Answer

A)  a physical measure such as volume is difficult to estimate than sales value 
B)  physical volume usually has little relationship to the revenue producing power of products 
C)  a physical measure usually results in less costs being allocated to the product that weighs the most 
D)  customers will easily understand that the products are overpriced 
A)  a physical measure such as volume is difficult to estimate than sales value 
B)  physical volume usually has little relationship to the revenue producing power of products 
C)  a physical measure usually results in less costs being allocated to the product that weighs the most 
D)  customers will easily understand that the products are overpriced

Question 3

The constant gross-margin percentage NRV method makes the simplifying assumption of treating the joint products as though they comprise a single product.

Accepted Answer

A) True 
 B)False

Question 4

The Green Company processes unprocessed goat milk up to the split-off point where two products, condensed goat milk and skim goat milk result. The following information was collected for the month of October:
 
The costs of purchasing the of unprocessed goat milk and processing it up to the split-off point to yield a total of 105,000 gallons of saleable product was $191,480. There were no inventory balances of either product. Condensed goat milk may be processed further to yield 45,000 gallons (the remainder is shrinkage) of a medicinal milk product, Xyla, for an additional processing cost of $5 per usable gallon. Xyla can be sold for $20 per gallon.
Skim goat milk can be processed further to yield 58,200 gallons of skim goat ice cream, for an additional processing cost per usable gallon of $5. The product can be sold for $12 per gallon.
There are no beginning and ending inventory balances.
Using the sales value at split-off method, what is the gross-margin percentage for skim goat milk at the split-off point? (Round intermediary percentages to the nearest hundredth.)

Accepted Answer

A)  46.25% 
B)  50.00% 
C)  56.75% 
D)  53.75% 
A)  46.25% 
B)  50.00% 
C)  56.75% 
D)  53.75%

Question 5

Bismite Corporation purchases trees from Cheney lumber and processes them up to the split-off point where two products (paper and pencil casings) emerge from the process. 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:
 
The cost of purchasing 330 trees and processing them up to the split-off point to yield 190,000 sheets of paper and 190,000 pencil casings is $15,500.
Bismite's accounting department reported no beginning inventory.
If the sales value at split-off method is used, what is the approximate production cost for each pencil
Casing? (Round intermediary percentages to the nearest hundredth.)

Accepted Answer

A)  $0.035 
B)  $0.049 
C)  $0.034 
D)  $0.048 
A)  $0.035 
B)  $0.049 
C)  $0.034 
D)  $0.048

Question 6

Which of the following statements is true of main products and byproducts?

Accepted Answer

A)  A byproduct will never become a main product. 
B)  A main product will never become a byproduct. 
C)  Product classifications may change over time. 
D)  Product classifications remains constant over time. 
A)  A byproduct will never become a main product. 
B)  A main product will never become a byproduct. 
C)  Product classifications may change over time. 
D)  Product classifications remains constant over time.

Question 7

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 goo

Question 8

Silver Company uses one raw material, silver ore, for all of its products. It spends considerable time getting the silver from the ore before it starts the actual processing of the finished products, rings, lockets, etc. Traditionally, the company made one product at a time and charged the product with all costs of production, from ore to final inspection. However, in recent months, the cost accounting reports have been somewhat disturbing to management. It seems that some of the finished products are costing more than they should, even to the point of approaching their retail value. It has been noted by the accounting manager that this problem began when the company started buying ore from different parts of the world, some of which require difficult extraction methods.
Required:
Can you explain how the company might change its accounting system to reflect the reporting problems better? Are there other problems with the purchasing area?

Accepted Answer

It appears that the company needs to sta

Question 9

Separable costs that do not differ between alternatives are irrelevant for decision making.

Accepted Answer

A) True 
 B)False

Question 10

Which of the following statements is true of joint costing?

Accepted Answer

A)  The costs of a production process that yields multiple products simultaneously are called joint costs. 
B)  Distribution costs incurred beyond the split-off point that are assignable to each of the specific products identified at the split-off point are considered as joint costs. 
C)  The primary purpose of joint costing is to allocate the separable costs to the individual products that are eventually sold. 
D)  Joint costing is less useful for companies which manufacture multiple products simultaneously from the same production process. 
A)  The costs of a production process that yields multiple products simultaneously are called joint costs. 
B)  Distribution costs incurred beyond the split-off point that are assignable to each of the specific products identified at the split-off point are considered as joint costs. 
C)  The primary purpose of joint costing is to allocate the separable costs to the individual products that are eventually sold. 
D)  Joint costing is less useful for companies which manufacture multiple products simultaneously from the same production process.

Question 11

How does the net realizable value method allocate joint costs?

Accepted Answer

A)  allocates joint costs to joint products on the basis of a comparable physical measure at the split-off point 
B)  allocates joint costs to joint products on the basis of the relative sales value at the split-off point 
C)  allocates joint costs to joint products in a way that each product has an identical gross-margin percentage 
D)  allocates joint costs to joint products on the basis of relative NRV 
A)  allocates joint costs to joint products on the basis of a comparable physical measure at the split-off point 
B)  allocates joint costs to joint products on the basis of the relative sales value at the split-off point 
C)  allocates joint costs to joint products in a way that each product has an identical gross-margin percentage 
D)  allocates joint costs to joint products on the basis of relative NRV

Question 12

What is the name of a cost of production process that yields multiple products simultaneously?

Accepted Answer

A)  byproduct 
B)  joint 
C)  main 
D)  separable 
A)  byproduct 
B)  joint 
C)  main 
D)  separable

Question 13

The production method for recognizing byproducts is simpler and is often used in practice, primarily because the dollar amounts of byproducts are immaterial.

Accepted Answer

A) True 
 B)False

Question 14

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

Accepted Answer

A) True 
 B)False

Question 15

The Kenton Company processes unprocessed milk to produce two products, Butter Cream and Condensed Milk. The following information was collected for the month of June:
Direct Materials processed:27,500 gallons (after shrinkage)
 
The cost of purchasing the of unprocessed milk and processing it up to the split-off point to yield a total of 27,500 gallons of saleable product was $53,000.
The company uses constant gross-margin percentage NRV method to allocate the joint costs of production. What is the allocated joint costs of Butter Cream? (Round intermediary percentages to the nearest hundredth.)

Accepted Answer

A)  $33,580 
B)  $13,000 
C)  $35,600 
D)  $19,428 
A)  $33,580 
B)  $13,000 
C)  $35,600 
D)  $19,428

Question 16

Under the benefits-received criterion, the physical-measure method is much less desirable than the sales value at split-off method. Why?

Accepted Answer

Under the benefits-received criterion, t

Question 17

In joint costing, which of the following changes may lead to a change in product classification?

Accepted Answer

A)  main product sales price increases due to a new application 
B)  byproduct sales price decreases due to a new government regulation 
C)  main product becomes technologically obsolete and it's market value falls significantly 
D)  byproduct losses value due to a competing products 
A)  main product sales price increases due to a new application 
B)  byproduct sales price decreases due to a new government regulation 
C)  main product becomes technologically obsolete and it's market value falls significantly 
D)  byproduct losses value due to a competing products

Question 18

The Brital Company processes unprocessed milk to produce two products, Butter Cream and Condensed Milk. The following information was collected for the month of June:
Direct Materials processed:33,000 gallons
 
The costs of purchasing the of unprocessed milk and processing it up to the split-off point to yield a total of 33,000 gallons of saleable product was $89,450.
The company uses constant gross-margin percentage NRV method to allocate the joint costs of production. What is the allocated joint costs of Butter Cream?

Accepted Answer

A)  $34,600 
B)  $15,000 
C)  $61,925 
D)  $27,525 
A)  $34,600 
B)  $15,000 
C)  $61,925 
D)  $27,525

Question 19

Which of the following factors would guide you in classifying a product as a main product or byproduct?

Accepted Answer

A)  Number of units per processing period 
B)  Weight or volume of outputs per period 
C)  Percentage of total sales value 
D)  Joint costs incurred up to the split-off point 
A)  Number of units per processing period 
B)  Weight or volume of outputs per period 
C)  Percentage of total sales value 
D)  Joint costs incurred up to the split-off point

Question 20

Which method of accounting recognizes byproducts in the financial statements at the time their production is completed?

Accepted Answer

A)  gross margin method 
B)  sales method 
C)  production method 
D)  market value method 
A)  gross margin method 
B)  sales method 
C)  production method 
D)  market value method

What are the two methods to account for byproducts. Which is the more appropriate method to use and why?

Which of the following reasons explain why a physical-measure to allocate joint costs is less preferred than the sales value at split-off point?

The constant gross-margin percentage NRV method makes the simplifying assumption of treating the joint products as though they comprise a single product.

Which of the following statements is true of main products and byproducts?

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.

Separable costs that do not differ between alternatives are irrelevant for decision making.

Which of the following statements is true of joint costing?

How does the net realizable value method allocate joint costs?

What is the name of a cost of production process that yields multiple products simultaneously?

The production method for recognizing byproducts is simpler and is often used in practice, primarily because the dollar amounts of byproducts are immaterial.

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

Under the benefits-received criterion, the physical-measure method is much less desirable than the sales value at split-off method. Why?

In joint costing, which of the following changes may lead to a change in product classification?

Which of the following factors would guide you in classifying a product as a main product or byproduct?

Which method of accounting recognizes byproducts in the financial statements at the time their production is completed?

The Manager and Management Accounting

An Introduction to Cost Terms and Purposes

Cost-Volume-Profit Analysis

Job Costing

Activity-Based Costing and Activity-Based Management

Master Budget and Responsibility Accounting

Flexible Budgets, Direct-Cost Variances, and Management Control

Flexible Budgets, Overhead Cost Variances, and Management Control

Inventory Costing and Capacity Analysis

Determining How Costs Behave

Decision Making and Relevant Information

Strategy, Balanced Scorecard, and Strategic Profitability Analysis

Pricing Decisions and Cost Management

Cost Allocation, Customer-Profitability Analysis, and Sales-Variance Analysis

Allocation of Support-Department Costs, Common Costs, and Revenues

Process Costing

Spoilage, Rework, and Scrap

Balanced Scorecard: Quality and Time

Inventory Management, Just-in-Time, and Simplified Costing Methods

Capital Budgeting and Cost Analysis

Management Control Systems, Transfer Pricing, and Multinational Considerations

Performance Measurement, Compensation, and Multinational Considerations

Filters

Exam 16: Cost Allocation: Joint Products and Byproducts

What are the two methods to account for byproducts. Which is the more appropriate method to use and why?

Which of the following reasons explain why a physical-measure to allocate joint costs is less preferred than the sales value at split-off point?

The constant gross-margin percentage NRV method makes the simplifying assumption of treating the joint products as though they comprise a single product.

Which of the following statements is true of main products and byproducts?

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.

Separable costs that do not differ between alternatives are irrelevant for decision making.

Which of the following statements is true of joint costing?

How does the net realizable value method allocate joint costs?

What is the name of a cost of production process that yields multiple products simultaneously?

The production method for recognizing byproducts is simpler and is often used in practice, primarily because the dollar amounts of byproducts are immaterial.

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

Under the benefits-received criterion, the physical-measure method is much less desirable than the sales value at split-off method. Why?

In joint costing, which of the following changes may lead to a change in product classification?

Which of the following factors would guide you in classifying a product as a main product or byproduct?

Which method of accounting recognizes byproducts in the financial statements at the time their production is completed?

The Manager and Management Accounting

An Introduction to Cost Terms and Purposes

Cost-Volume-Profit Analysis

Job Costing

Activity-Based Costing and Activity-Based Management

Master Budget and Responsibility Accounting

Flexible Budgets, Direct-Cost Variances, and Management Control

Flexible Budgets, Overhead Cost Variances, and Management Control

Inventory Costing and Capacity Analysis

Determining How Costs Behave

Decision Making and Relevant Information

Strategy, Balanced Scorecard, and Strategic Profitability Analysis

Pricing Decisions and Cost Management

Cost Allocation, Customer-Profitability Analysis, and Sales-Variance Analysis

Allocation of Support-Department Costs, Common Costs, and Revenues

Process Costing

Spoilage, Rework, and Scrap

Balanced Scorecard: Quality and Time

Inventory Management, Just-in-Time, and Simplified Costing Methods

Capital Budgeting and Cost Analysis

Management Control Systems, Transfer Pricing, and Multinational Considerations

Performance Measurement, Compensation, and Multinational Considerations

Filters