Exam 15: Cost Allocation: Joint Products and Byproducts

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. -All of the following statements about the constant gross margin percentage of net realizable method are true EXCEPT

Costs which are assignable beyond the splitoff point at which individual products emerge are called

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 are the physical-volume proportions for products U and V, respectively?

The selection of a joint cost allocation method assists managers in which of the following decisions?

Use the information below to answer the following question(s).Chem Manufacturing Company processes direct materials up to the splitoff point, where two products (X and Y)are obtained and sold.The following information was collected for the month of November.Direct materials processed: 10,000 litres (10,000 litres yield 9,500 litres of good product and 500 litres of shrinkage) The cost of purchasing 10,000 litres of direct materials and processing it up to the splitoff point to yield a total of 9,500 litres of good products was $975,000.The beginning inventories totalled 50 litres for X and 25 litres for Y.Ending inventory amounts reflected 300 litres of product X and 525 litres of product Y.October costs were per unit were the same as November. -What is product X's approximate gross margin percentage using the physical volume method?

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.

Byproducts and scrap are differentiated by

Santos Corporation processes a single material into three separate products X, Y, and Z.During November, the joint costs of processing were $100,000.Production and sales value information for the month were as follows: Required: Determine the amount of joint cost allocated to each product if the constant gross margin percentage of NRV method is used.

Which of the following is NOT a strategy for costing inventory when joint-cost circumstances are involved?

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: 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?

BC Lumber processes timber into four products.During January the joint costs of processing were $280,000.There was no beginning inventory at the beginning of the month.Production and sales value information for the month were as follows: Sales Value at Required: Determine the value of ending inventory if the sales value at splitoff method is used for product costing.Round to 3 decimal places when necessary.

The net realizable value method can be used for products for which there may not be any market price available at splitoff.

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. -Which of the following joint cost allocation methods calculates expected profits before any costs are allocated?

Trundle Ltd.produces two main products, J and K; and, a byproduct, L.There were no beginning inventories.During April, it incurred $275,000 of joint costs, which are allocated to main products using the physical output method.Additional information follows: Required: Assuming Trundle recognizes byproduct revenue at the time of sale, what is the total value of ending inventory?

Which of the following statements is TRUE regarding main products, byproducts, and scrap?

CSI Chemical, Inc.processes pine rosin into three products; turpentine, paint thinner, and spot remover.During May the joint costs of processing were $240,000.Production and sales value information for the month were as follows: Required: Determine the amount of joint cost allocated to each product if the physical measure method is used.

What type of cost is the result of an event that results in multiple products simultaneously?

What are separable costs?

Juno Ltd.manufactures three separate products Q, R, and S from a joint production process .During March, the joint costs of processing were $875,000.Production and sales value information for the month were as follows: Required: Determine the amount of joint cost allocated to each product if the constant gross margin percentage NRV method is used.

The decision of whether to process products beyond the splitoff process should be based on which of the following?