Answer the following questions using the information below: Bismite Corporation 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 October: $\begin{array}{lll} \text { Trees processed: } & 250 \text { trees } & \\ \text { Production: } & \text { paper } & 180,000 \text { sheets } \\ & \text { pencil casings } & 180,000 \\ \text { Sales: } & \text { paper } & 174,000 \text { at } \$ 0.12 \text { per page } \\ & \text { pencil casings } & 178,500 \text { at } \$ 0.15 \text { per casing } \end{array}$ The cost of purchasing 250 trees and processing them up to the splitoff point to yield 180,000 sheets of paper and 180,000 pencil casings is $12,500. Bismite's accounting department reported no beginning inventory. -What is the total sales value at the splitoff point of the pencil casings?

A) $21,600 B) $27,000 C) $26,775 D) $20,880 A) $21,600 B) $27,000 C) $26,775 D) $20,880

Answer the following questions using the information below: Bismite Corporation 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 October: $\begin{array}{lll} \text { Trees processed: } & 250 \text { trees } & \\ \text { Production: } & \text { paper } & 180,000 \text { sheets } \\ & \text { pencil casings } & 180,000 \\ \text { Sales: } & \text { paper } & 174,000 \text { at } \$ 0.12 \text { per page } \\ & \text { pencil casings } & 178,500 \text { at } \$ 0.15 \text { per casing } \end{array}$ The cost of purchasing 250 trees and processing them up to the splitoff point to yield 180,000 sheets of paper and 180,000 pencil casings is $12,500. Bismite's accounting department reported no beginning inventory. -What are the paper's and the pencil's approximate weighted cost proportions using the sales value at splitoff method,respectively?

A) 50.00% and 50.00% B) 33.33% and 66.67% C) 31.82% and 68.18% D) 44.44% and 55.56% A) 50.00% and 50.00% B) 33.33% and 66.67% C) 31.82% and 68.18% D) 44.44% and 55.56%

Answer the following questions using the information below: Netzone Company is in semiconductor industry and fabrication of silicon-wafer chips splits off two types of memory chips, Standard and Premium. The following information was collected for last quarter of the calendar year: $\text { Direct materials processed: } 200 \mathrm{kgs} \text { (Both standard and premium chips weigh } 10 \text { grams each) }$ $\begin{array}{lll} \text { Production: } & \text { Standard } & 10,000 \text { chips } \\ & \text { Premium } & 6,500 \text { chips } \\ \text { Sales: } & \text { Standard } & 9,500 \text { at } \$ 100 \text { per chip } \\ & \text { Premium } & 6,000 \text { at } \$ 170 \text { per chip } \end{array}$ The cost of purchasing 200 kgs of direct materials and processing it up to the splitoff point to yield a total of 16,500 chips of good products was $1,950,000. Beginning inventories totalled 100 chips for Standard and 50 chips for Premium. Ending inventory amounts reflected 100 chips of Standard and 50 chips of Premium. October costs per unit were the same as November. -When using a physical-volume measure,what is the approximate amount of joint costs that will be allocated Standard chips?

A) $1,170,000 B) $1,818,818 C) $975,000 D) $1,181,818 A) $1,170,000 B) $1,818,818 C) $975,000 D) $1,181,818

Exam 16: Cost Allocation: Joint Products and Byproducts

When a product is the result of a joint process,the decision to process the product past the splitoff point further should be influenced by the ________.

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(Multiple Choice)

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Question 1

Correct Answer:

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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.

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Question 2

Correct Answer:

Verified

a.For inventory costing,and cost of goods sold computations for financial accounting purposes.
Example: Cost of goods sold and ending inventory valuation is necessary for reports to shareholders and for the inland revenue service.
b.For internal costing and cost of goods sold computations for internal reporting purposes.
Example: These computations are necessary for division profitability analysis.
c.Reimbursement under contracts.
Example: A firm produces multiple products or services-and uses the same resources and facilities to produce the products or services.But not all the firm's products are under the contract.The firm must allocate the cost of these shared facilities or resources to reflect the portion used by the product under the contract.
d.Insurance settlement computations.
Example: Where a business with multiple products or services claim losses under an insurance policy and wants to calculate the loss.The insurance company and the insured must agree on the value of the loss.
e.Rate regulation.When companies are subject to rate regulation,the allocation of joint costs can be a significant factor in determining the regulated rates.
Example: Crude oil and natural gas are produced out of a common well.

Which of the following statements is true of the methods for allocating joint costs?

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(Multiple Choice)

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Question 3

Correct Answer:

Verified

Answer the following questions using the information below: Bismite Corporation 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 October: Trees processed: 250 trees Production: paper 180,000 sheets pencil casings 180,000 Sales: paper 174,000 at \ 0.12 per page pencil casings 178,500 at \ 0.15 per casing The cost of purchasing 250 trees and processing them up to the splitoff point to yield 180,000 sheets of paper and 180,000 pencil casings is $12,500. Bismite's accounting department reported no beginning inventory. -What is the total sales value at the splitoff point of the pencil casings?

(Multiple Choice)

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Question 4

Distinguish between the two principal methods of accounting for byproducts,the production byproduct method and the sale byproduct method.Briefly discuss the relative merits (or lack thereof)of each.

(Essay)

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Question 5

The focus of joint costing is on allocating costs to individual products ________.

(Multiple Choice)

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Question 6

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

(Multiple Choice)

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Question 7

In joint costing,the constant gross-margin percentage NRV method is an example of allocating costs using physical measures.

(True/False)

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Question 8

An advantage of the physical-measure method is that obtaining physical measures for all products is an easy task.

(True/False)

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Question 9

In joint costing,the ________ assumes that all the markup is attributable to the joint process costs.

(Multiple Choice)

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Question 10

________ is the differentiating factor while classifying a product as a main product or byproduct.

(Multiple Choice)

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Question 11

Answer the following questions using the information below: Bismite Corporation 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 October: Trees processed: 250 trees Production: paper 180,000 sheets pencil casings 180,000 Sales: paper 174,000 at \ 0.12 per page pencil casings 178,500 at \ 0.15 per casing The cost of purchasing 250 trees and processing them up to the splitoff point to yield 180,000 sheets of paper and 180,000 pencil casings is $12,500. Bismite's accounting department reported no beginning inventory. -What are the paper's and the pencil's approximate weighted cost proportions using the sales value at splitoff method,respectively?

(Multiple Choice)

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Question 12

Answer the following questions using the information below: Netzone Company is in semiconductor industry and fabrication of silicon-wafer chips splits off two types of memory chips, Standard and Premium. The following information was collected for last quarter of the calendar year: $\text { Direct materials processed: } 200 \mathrm{kgs} \text { (Both standard and premium chips weigh } 10 \text { grams each) }$ Production: Standard 10,000 chips Premium 6,500 chips Sales: Standard 9,500 at \ 100 per chip Premium 6,000 at \ 170 per chip The cost of purchasing 200 kgs of direct materials and processing it up to the splitoff point to yield a total of 16,500 chips of good products was $1,950,000. Beginning inventories totalled 100 chips for Standard and 50 chips for Premium. Ending inventory amounts reflected 100 chips of Standard and 50 chips of Premium. October costs per unit were the same as November. -When using a physical-volume measure,what is the approximate amount of joint costs that will be allocated Standard chips?

(Multiple Choice)

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Question 13

The sales-value at splitoff method of joint cost allocation involves computation of the relative amounts of the sales value of the amount of each joint product sold during the period.

(True/False)

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Question 14

Define the terms main product,joint product,and byproduct.Give at least one example of each type of product.

(Essay)

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Question 15

In joint costing,outputs with no sales value are always excluded when costs are allocated using physical measures.

(True/False)

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Question 16

For each of the following methods of allocating joint costs,give a positive or a negative aspect of selecting each one to allocate joint costs. a.sales value at splitoff b.estimated net realizable value method c.the constant gross margin method d.a physical measure such as volume

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Question 17

One of the reasons to allocate joint costs to individual products is to aid in the preparation of tax returns.

(True/False)

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Question 18

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?

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Question 19

The drawback of the constant gross-margin percentage NRV method in joint costing is that ________.

(Multiple Choice)

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Question 20

Showing 1 - 20 of 151

When a product is the result of a joint process,the decision to process the product past the splitoff point further should be influenced by the ________.

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.

Which of the following statements is true of the methods for allocating joint costs?

Distinguish between the two principal methods of accounting for byproducts,the production byproduct method and the sale byproduct method.Briefly discuss the relative merits (or lack thereof)of each.

The focus of joint costing is on allocating costs to individual products ________.

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

In joint costing,the constant gross-margin percentage NRV method is an example of allocating costs using physical measures.

An advantage of the physical-measure method is that obtaining physical measures for all products is an easy task.

In joint costing,the ________ assumes that all the markup is attributable to the joint process costs.

________ is the differentiating factor while classifying a product as a main product or byproduct.

The sales-value at splitoff method of joint cost allocation involves computation of the relative amounts of the sales value of the amount of each joint product sold during the period.

Define the terms main product,joint product,and byproduct.Give at least one example of each type of product.

In joint costing,outputs with no sales value are always excluded when costs are allocated using physical measures.

For each of the following methods of allocating joint costs,give a positive or a negative aspect of selecting each one to allocate joint costs. a.sales value at splitoff b.estimated net realizable value method c.the constant gross margin method d.a physical measure such as volume

One of the reasons to allocate joint costs to individual products is to aid in the preparation of tax returns.

The drawback of the constant gross-margin percentage NRV method in joint costing is that ________.

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An Introduction to Cost Terms and Purposes

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

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Balanced Scorecard: Quality and Time

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