Exam 7: Cost Allocation: Departments, Joint Products, and By-Products

Dual allocation is a cost allocation approach that separates direct and indirect costs, tracing the direct costs directly to the cost object that:

Harmon Inc. produces joint products L, M, and N from a joint process. Information concerning a batch produced in May at a joint cost of $75,000 was as follows:The amount of joint costs allocated to product N using the net realizable value method is (calculate all ratios and percentages to 4 decimal places, for example 33.3333%, and round all dollar amounts to the nearest whole dollar):

Which of the following statements best describes a by-product?

The direct method of departmental cost allocation ignores:

Marin Products produces three products — DBB-1, DBB-2, and DBB-3 from a joint process. Each product may be sold at the split-off point or processed further. Additional processing requires no special facilities, and production costs of further processing are entirely variable and traceable to the products involved. Key information about Marin's production, sales, and costs follows.The amount of joint costs allocated to product DBB-3 using the physical measure method is (calculate all ratios and percentages to 2 decimal places, for example 33.33%, and round all dollar amounts to the nearest whole dollar):

The departmental cost allocation approach is preferred when the firm has:

Which of the following is not one of the objectives of cost allocation?

Stulce Inc.produces joint products A, B, and C from a joint process.Information concerning a batch produced in May at a joint cost of $120,000 was as follows: Required(calculate all ratios, percentages, and unit costs to 2 decimal places, for example 33.33%, and round all dollar amounts to the nearest whole dollar): 1.Allocate the joint costs to the joint products using the physical measures method. 2.Calculate the gross margin for each of the three products using the cost allocation for the physical unit method in part (1) above. 3.Allocate the joint costs to the joint products using the net realizable method. 4.Calculate the gross margin for each of the three products using the cost allocation for the net realizable value method in part (3) above.

Garrison Co. produces three products — X, Y, and Z — from a joint process. Each product may be sold at the split-off point or processed further. Additional processing requires no special facilities, and production costs of further processing are entirely variable and traceable to the products involved. Last year all three products were processed beyond split-off. Joint production costs for the year were $120,000. Sales values and costs needed to evaluate Garrison's production policy follow.The amount of joint costs allocated to product X using the net realizable value method is (calculate all ratios and percentages to 4 decimal places, for example 33.3333%, and round all dollar amounts to the nearest whole dollar):

Harmon Inc. produces joint products L, M, and N from a joint process. Information concerning a batch produced in May at a joint cost of $75,000 was as follows:The amount of joint costs allocated to product N using the physical measure method is (calculate all ratios and percentages to 4 decimal places, for example 33.3333%, and round all dollar amounts to the nearest whole dollar):

A key disincentive effect of departmental cost allocation can occur when:

Garrison Co. produces three products — X, Y, and Z — from a joint process. Each product may be sold at the split-off point or processed further. Additional processing requires no special facilities, and production costs of further processing are entirely variable and traceable to the products involved. Last year all three products were processed beyond split-off. Joint production costs for the year were $120,000. Sales values and costs needed to evaluate Garrison's production policy follow.The amount of joint costs allocated to product Z using the net realizable value method is (calculate all ratios and percentages to 4 decimal places, for example 33.3333%, and round all dollar amounts to the nearest whole dollar):

An alternative concept of fairness in cost allocation, absent the cause-and-effect basis, includes:

By-product costing that uses the asset recognition method(s) creates:

By-product costing approaches include:

Harmon Inc. produces joint products L, M, and N from a joint process. Information concerning a batch produced in May at a joint cost of $75,000 was as follows:The amount of joint costs allocated to product L using the net realizable value method is (calculate all ratios and percentages to 4 decimal places, for example 33.3333%, and round all dollar amounts to the nearest whole dollar):

Place the following phases of the departmental approach in the correct order. 1.Allocate the production department costs to products. 2)Allocate service costs to the overhead costs. 3)Allocate the service department costs to the production department. 4)Trace all direct costs and allocate overhead costs to both the service and production departments.

Firm X has a production process that has a total joint cost of $15,000.At the split-off point, there are 2,000 pounds of Product 1 and 3,000 pounds of Product 2.What is the cost per pound of Product 1 using the physical measure method?

Which of the following methods considers all reciprocal flows between service departments through simultaneous equations?

Which of the following is an example of a physical measure used in the physical measure method?