Question 1

A company can alter its total gross margin through its selection of joint cost allocation methods.

Accepted Answer

A) True 
 B)False

Question 2

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 are the pencil casings' sales value at the split-off point?

Accepted Answer

A) $300 
B) $1,480 
C) $3,000 
D) $3,750 
E) $4,500 
A) $300 
B) $1,480 
C) $3,000 
D) $3,750 
E) $4,500

Question 3

Orange Paper Company processes wood pulp into two products.During April the joint costs of processing were $132,000.Production and sales value information for the month were as follows:
   Paper sells for $2.65 a kilogram and cardboard sells for $3.40 a kilogram.There were no beginning or ending inventories for April.Required:
1.Determine the amounts to be allocated to each product using the:
   2.If the cardboard is sold at the splitoff point then the post splitoff factory capacity can be renovated and leased for the year.The cost of the renovation is budgeted at $125,000 and the annual lease revenue will be $165,000.Determine if it is more profitable for the cardboard to be sold at the splitoff point or at the end of production.

Accepted Answer

1.(a)NRV method joint cost all

Question 4

Use the information below to answer the following question(s):
Orange Paper Company processes wood pulp into two products.During February the joint costs of processing were $156,000.Production and sales value information for the month were as follows:
   Paper sells for $2.85 a kilogram and cardboard sells for $3.90 a kilogram.There were no beginning inventories for April but ending inventories totalled 15,000 kilograms for paper and 18,000 kilograms for cardboard.
-How much of the Orange Paper Company joint costs should be allocated to the paper using the net realizable value method based on total production?

Accepted Answer

A) $78,000 
B) $62,400 
C) $93,600 
D) $84,240 
E) $71,760 
A) $78,000 
B) $62,400 
C) $93,600 
D) $84,240 
E) $71,760

Question 5

The constant gross margin percentage of NRV method allocates joint costs to joint products in such a way that the gross margin on each joint product is the same as it was in the previous year.

Accepted Answer

A) True 
 B)False

Question 6

Which statement is NOT true regarding the sales method of accounting for byproducts?

Accepted Answer

A) The method makes no journal entries until the byproduct is sold. 
B) This method is the preferred method because of the matching principle. 
C) Revenues of the byproduct can be recorded in the income statement as revenue. 
D) Revenues of the byproduct are not recorded at the time of production. 
E) No value is attached to the byproduct inventory. 
A) The method makes no journal entries until the byproduct is sold. 
B) This method is the preferred method because of the matching principle. 
C) Revenues of the byproduct can be recorded in the income statement as revenue. 
D) Revenues of the byproduct are not recorded at the time of production. 
E) No value is attached to the byproduct inventory.

Question 7

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 the approximate amount of joint costs in Product Y's ending inventory if the physical volume method is used and the company uses the FIFO inventory method?

Accepted Answer

A) $50,917 
B) $53,883 
C) $60,145 
D) $60,285 
E) $67,358 
A) $50,917 
B) $53,883 
C) $60,145 
D) $60,285 
E) $67,358

Question 8

Red Paper Company processes wood pulp into two products.During March the joint costs of processing were $144,000.Production and sales value information for the month were as follows:
   Paper sells for $2.75 a kilogram and cardboard sells for $3.50 a kilogram.There were no beginning inventories for March but ending inventories totalled 10,000 kilograms for paper and 12,000 kilograms for cardboard.Required:
Prepare a product line income statement assuming that joint costs are allocated on the constant gross margin percentage method based on total production.Present production costs and separable costs individually.

Accepted Answer

@#IMG-DLM& Gross margin % = $1

Question 9

Explain the difference between a joint product and a byproduct.Can a byproduct ever become a joint product?

Accepted Answer

The differentiating factor between a joi

Question 10

Answer the following question(s)using the information below:
The Morton Company processes unprocessed goat milk up to the splitoff 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 65,000 litres of unprocessed goat milk and processing it up to the splitoff point to yield a total of 58,500 litres of salable product was $72,240.There were no inventory balances of either product.Condensed goat milk may be processed further to yield 19,500 litres (the remainder is shrinkage)of a medicinal milk product, Xyla, for an additional processing cost of $3 per usable litre.Xyla can be sold for $18 per litre.Skim goat milk can be processed further to yield 28,100 litres of skim goat ice cream, for an additional processing cost per usable litre of $2.50.The product can be sold for $9 per litre.There are no beginning and ending inventory balances.
-Using the sales value at splitoff method, what is the gross margin percentage for skim goat milk at the splitoff point?

Accepted Answer

A) 21.1% 
B) 55.1% 
C) 58.1% 
D) 38.2% 
E) 41.9% 
A) 21.1% 
B) 55.1% 
C) 58.1% 
D) 38.2% 
E) 41.9%

Question 11

Use the information below to answer the following question(s):
Orange Paper Company processes wood pulp into two products.During February the joint costs of processing were $156,000.Production and sales value information for the month were as follows:
   Paper sells for $2.85 a kilogram and cardboard sells for $3.90 a kilogram.There were no beginning inventories for April but ending inventories totalled 15,000 kilograms for paper and 18,000 kilograms for cardboard.
-What will be the total incremental benefit or (loss)from all potential sales of processing the paper beyond the splitoff point?

Accepted Answer

A) $251,000 
B) $281,000 
C) $513,000 
D) $311,000 
E) $232,000 
A) $251,000 
B) $281,000 
C) $513,000 
D) $311,000 
E) $232,000

Question 12

Answer the following question(s)using the information below:
The Morton Company processes unprocessed goat milk up to the splitoff 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 65,000 litres of unprocessed goat milk and processing it up to the splitoff point to yield a total of 58,500 litres of salable product was $72,240.There were no inventory balances of either product.Condensed goat milk may be processed further to yield 19,500 litres (the remainder is shrinkage)of a medicinal milk product, Xyla, for an additional processing cost of $3 per usable litre.Xyla can be sold for $18 per litre.Skim goat milk can be processed further to yield 28,100 litres of skim goat ice cream, for an additional processing cost per usable litre of $2.50.The product can be sold for $9 per litre.There are no beginning and ending inventory balances.
-Using the sales value at splitoff method, what is the gross margin percentage for condensed goat milk at the splitoff point?

Accepted Answer

A) 21.1% 
B) 55.1% 
C) 58.1% 
D) 38.2% 
E) 41.9% 
A) 21.1% 
B) 55.1% 
C) 58.1% 
D) 38.2% 
E) 41.9%

Question 13

What are a joint cost and a splitoff point?

Accepted Answer

A joint cost is the cost of a single pro

Question 14

Use the information below to answer the following question(s):
Orange Paper Company processes wood pulp into two products.During February the joint costs of processing were $156,000.Production and sales value information for the month were as follows:
   Paper sells for $2.85 a kilogram and cardboard sells for $3.90 a kilogram.There were no beginning inventories for April but ending inventories totalled 15,000 kilograms for paper and 18,000 kilograms for cardboard.
-What will be the total incremental benefit or (loss)from all potential sales of processing the cardboard beyond the splitoff point?

Accepted Answer

A) $257,800 
B) $237,800 
C) $217,800 
D) $311,000 
E) $277,000 
A) $257,800 
B) $237,800 
C) $217,800 
D) $311,000 
E) $277,000

Question 15

How should toxic waste be accounted for?

Accepted Answer

Toxic waste has negative reven

Question 16

Use the information below to answer the following question(s).Cranbrook Chemical Ltd.manufactures two industrial compounds.In the month of May, 15,000 litres of direct material costing $160,000 were processed at a cost of $400,000.The joint process yielded 16,000 containers of a compound known as Jarlon and 4,000 containers of a compound known as Kharton.The respective selling prices of Jarlon and Kharton are $38 and $58.Both products may be processed further.Jarlon may be processed into Jaxton at an incremental cost of $8 per jar of the final product while Kharton may be processed into Kraxton at an additional cost of $32 per jar of the final product.The volume of jars of the final product are: 12,000 and 3,000 for Jaxton and Kraxton respectively.The selling price of Jaxton is $48 per jar.The selling price of Kraxton is $102 per jar.
-Using the sales value at splitoff method, the percentage weightings for joint cost allocations for Jarlon and Kharton respectively are

Accepted Answer

A) 27.62% and 72.38%. 
B) 80.00% and 20.00%. 
C) 39.58% and 60.42%. 
D) 72.38% and 27.62%. 
E) 60.42% and 39.58%. 
A) 27.62% and 72.38%. 
B) 80.00% and 20.00%. 
C) 39.58% and 60.42%. 
D) 72.38% and 27.62%. 
E) 60.42% and 39.58%.

Question 17

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.
-Which of the following is FALSE concerning the physical measure method?

Accepted Answer

A) Technical personnel outside of accounting may be required in the joint costing determinations. 
B) Using the benefits-received criterion, the physical measure method less preferred than the sales at splitoff method. 
C) The physical measure may not reflect each individual product's ability to generate revenues. 
D) Using a common physical measure can result in the product with the lowest revenue-producing power having the most costs assigned to it. 
E) It results in a constant gross margin for all products. 
A) Technical personnel outside of accounting may be required in the joint costing determinations. 
B) Using the benefits-received criterion, the physical measure method less preferred than the sales at splitoff method. 
C) The physical measure may not reflect each individual product's ability to generate revenues. 
D) Using a common physical measure can result in the product with the lowest revenue-producing power having the most costs assigned to it. 
E) It results in a constant gross margin for all products.

Question 18

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.
-Two finished products, [A & B], are sold for $16 a unit and $24 a unit, respectively.Each product can also be sold at the splitoff point.Product A can be sold for $10 and Product B for $8.Joint costs for the two products totalled $8,000 for January for 600 units of A and 500 units of B.What are the respective joint costs assigned to each unit of products A and B if the sales value at splitoff method is used?

Accepted Answer

A) $5.92 and $8.88 
B) $6.40 and $14.40 
C) $6.40 and $9.10 
D) $8.00 and $9.10 
E) $8.00 and $6.40 
A) $5.92 and $8.88 
B) $6.40 and $14.40 
C) $6.40 and $9.10 
D) $8.00 and $9.10 
E) $8.00 and $6.40

Question 19

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 production approximate cost per unit if the sales value at splitoff method is used?

Accepted Answer

A) $0.0143 
B) $0.0150 
C) $0.0250 
D) $0.0259 
E) $0.0300 
A) $0.0143 
B) $0.0150 
C) $0.0250 
D) $0.0259 
E) $0.0300

Question 20

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:
   Joint costs for the company are $950,000.Required:
As the assistant controller, prepare a report to the controller.

Accepted Answer

The instruction in the required is delib

A company can alter its total gross margin through its selection of joint cost allocation methods.

The constant gross margin percentage of NRV method allocates joint costs to joint products in such a way that the gross margin on each joint product is the same as it was in the previous year.

Which statement is NOT true regarding the sales method of accounting for byproducts?

Explain the difference between a joint product and a byproduct.Can a byproduct ever become a joint product?

What are a joint cost and a splitoff point?

How should toxic waste be accounted for?

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

A company can alter its total gross margin through its selection of joint cost allocation methods.

The constant gross margin percentage of NRV method allocates joint costs to joint products in such a way that the gross margin on each joint product is the same as it was in the previous year.

Which statement is NOT true regarding the sales method of accounting for byproducts?

Explain the difference between a joint product and a byproduct.Can a byproduct ever become a joint product?

What are a joint cost and a splitoff point?

How should toxic waste be accounted for?

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