Deck 15: Joint Costs and Decision-Making

Question 1

A common cost

A)uses a common set of production costs, used in one common production process, to produce one product.
B)uses a common set of production costs used in one common production process to yield two products simultaneously.
C)uses a multiple set of production costs, used in one common production process to yield more than one product simultaneously.
D)uses a common set of production costs used in one common production process to yield more than one product simultaneously.

Answer 1

uses a common set of production costs used in one common production process to yield more than one product simultaneously.

Question 2

The split-off point is

A)the point in the process the products become separate and identifiable.
B)the point in the process, the company determines which product to process further.
C)the point in the production process where no further processing is needed.
D)the point in the process the product is ready to sell.

Answer 2

the point in the process the products become separate and identifiable.

Question 3

A secondary product recovered in producing a primary product during the joint process that has future use is called

A)scrap.
B)waste.
C)a by-product.
D)a joint product.

Answer 3

a by-product.

Question 4

All of the following statements about joint costs are true except:

A)Allocation is not necessary when costs are incurred using a joint process.
B)Joint costs are the costs incurred jointly in the production of two or more products.
C)The costs cannot be directly assigned to any one product involved.
D)Joint costs are incurred when making multiple products.

Question 5

The cost of fertilizing and harvesting sunflowers is an example of:

A)joint products.
B)by-products
C)joint costs.
D)cost allocation.

Question 6

Molasses would be considered what type of unintended output from refining sugar?

A)Joint product.
B)Scrap.
C)Waste.
D)By-product.

Question 7

Harvesting of corn produces corn husks. In a joint process, what type of unintended output are corn husks?

A)Joint product.
B)Scrap.
C)Waste.
D)By-product.

Question 8

In a joint process, waste would be considered all of the following except:

A)Waste is an unintended output.
B)Waste has economic value.
C)Waste is disposed of.
D)Waste is a by-product.

Question 9

Once a company classifies an unintended output of the joint process as a by-product, waste, or scrap,

A)the company will continue that classification until it no longer produces the product.
B)the company will evaluate the classifications yearly.
C)the classifications will remain fluid and can change as the usefulness of the products changes.
D)the classifications will change based on the profitability of the product.

Question 10

The following costs are included in joint costs:

A)direct materials.
B)direct labor.
C)direct material and direct labor.
D)direct material, direct labor, and manufacturing overhead.

Question 11

Separable costs are also known as

A)by-products.
B)joint costs.
C)further processing costs.
D)common costs.

Question 12

Further processing costs are costs that

A)are incurred within the joint process.
B)are incurred to sell the product as is.
C)are incurred to create a by-product.
D)are incurred to process the product further.

Question 13

All of the following statements about joint products are true, except:

A)All joint products can be sold at the split-off point.
B)A product that is processed further should be sold for a higher price.
C)Management must make a decision at split-off to process further or sell the product.
D)There is no economic value attached to some products at the split-off point.

Question 14

Xander incurs costs of $20,000 for direct materials, $15,000 for direct labor, and $10,000 for manufacturing overhead. The costs incurred resulted in a single process that resulted in two products, Bugs, and Rugs. Bugs can be sold at split-off for $60,000 or be processed further at a cost of $15,000. The new product, Dubs, can be sold for $105,000. How much are Xander's joint costs?

A)$30,000.
B)$35,000.
C)$45,000.
D)$60,000.

Question 15

When manufacturing a wooden chair, sawdust would be an example of

A)Joint product.
B)Scrap.
C)Waste.
D)By-product.

Question 16

Which of the following is a by-product?

A)whole milk.
B)lumber.
C)honey.
D)fertilizer.

Question 17

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

A)A product that has a selling price similar to that of the main product.
B)A product that is created along with the main product and the sales value does not cover its cost of production.
C)A product that is produced from material that would otherwise be scrapped.
D)A product that has a lower unit selling price than the main product.

Question 18

Which of the following are identifiable as different individual products before split-off for cost accumulate purposes?

A)A.
B)B.
C)C.
D)D.

Question 19

The _____ method of allocating joint costs uses pounds of product produced.

A)sales value at split-off.
B)net realizable value.
C)physical quantities.
D)weighted average.

Question 20

The method of allocating joint costs that would assign the same amount of cost per unit to two joint products that sell for $5 and $15, respectively, is the

A)sales value at split-off method.
B)net realizable value method.
C)physical quantities method.
D)direct allocation method.

Question 21

When there is no ready market price available for an individual product at the split-off point, which method of allocation should be used?

A)sales value at split-off method.
B)net realizable value method.
C)physical quantities method.
D)direct allocation method.

Question 22

The sales value at split-off method allocates joint costs of production using the

A)prospective sales values of the process's total production and the relative proportion of each product's sales value to the total.
B)relative proportion of each product's sales value to the total.
C)final sales value less further processing costs after the split-off point.
D)prospective sales values of the process's total production.

Question 23

Which allocation method recognizes that costs incurred after the split-off point are part of the cost total on which profit is expected to be earned?

A)sales value at split-off method.
B)net realizable value method.
C)physical quantities method.
D)direct allocation method.

Question 24

Which of the following statements is true regarding the consideration of allocation costs at split-off?

A)Allocating joint costs using the average costs is the quickest and most accurate process.
B)The sales value at the split-off method is the only true way to allocate joint costs to joint products.
C)There are three methods that can be used to allocate costs.
D)If there are two products equal in value at the split-off point, it would make the most sense to use an even allocation of costs.

Question 25

The sales price at split-off is used to allocate

A)A.
B)B.
C)C.
D)D.

Question 26

The net realizable value (NRV) of a product is the

A)final sales value less additional processing costs and allocated joint costs.
B)final sales value less additional processing costs.
C)sales at split-off less additional process costs.
D)sales at split-off less additional processing costs and allocated joint costs.

Question 27

If the sales price at the split-off point is available and reliable, the best method of allocating joint product costs is the

A)sales value at split-off method.
B)net realizable value method.
C)physical quantities method.
D)direct allocation method.

Question 28

If the sales price at the split-off point is not available, but the net realizable value is available and reliable, the best method of allocating joint product costs is the

A)sales value at split-off method.
B)net realizable value method.
C)physical quantities method.
D)direct allocation method.

Question 29

If the sales price at the split-off point and the net realizable value is not available, the best method of allocating joint product costs is the

A)sales value at split-off method.
B)net realizable value method.
C)physical quantities method.
D)direct allocation method.

Question 30

If the necessary information is available, which method is preferred when allocating joint costs?

A)sales value at split-off method.
B)net realizable value method.
C)physical quantities method.
D)direct allocation method.

Question 31

The sales value at split-off method is preferred. All the following are true regarding the reasons, except:

A)Sales prices at the split-off point are objective.
B)The sales value at split-off method measures the true economic value of a company.
C)The sales value at split-off method measures benefits returned to the company.
D)The ROI (return on investment) is accurately measured and the point of being in business.

Question 32

The biggest challenge of the physical quantities method is

A)the economic value returned to the company is accurately measured.
B)the significant variability in end prices.
C)no common denominator.
D)companies will fully expense joint costs in the periods they are incurred.

Question 33

If a company has no estimates to allocate joint product costs, a company will typically

A)use the sales value at split-off method.
B)use the net realizable value method.
C)use the physical quantities method.
D)fully expense the joint costs in the period they are incurred.

Question 34

Which of the following would not be considered a physical measure to allocate joint costs using the physical quantities method?

A)feet of lumber.
B)dollars of labor.
C)ounces of gold.
D)tons of steel.

Question 35

Cisco Company manufactures three products, A, B & C. These three products are created through a joint process that costs $26,000.The following data is provided for the three products: What is the amount of joint costs assigned to Product A using the sales-value-at-split-off method? (Round the nearest whole dollar)

A)$1,010.
B)$6,190.
C)$6,500.
D)$14,857.

Question 36

Cisco Company manufactures three products, A, B & C. These three products are created through a joint process that costs $26,000. The following data is provided for the three products: What is the amount of joint costs assigned to Product B using the sales-value-at-split-off method? (Round the nearest whole dollar)

A)$2,019.
B)$10,833.
C)$12,381.
D)$24,762.

Question 37

Cisco Company manufactures three products, A, B & C. These three products are created through a joint process that costs $26,000. The following data is provided for the three products: What is the amount of joint costs assigned to Product C using the sales-value-at-split-off method? (Round the nearest whole dollar)

A)$1,212.
B)$7,429.
C)$8,667.
D)$19,810.

Question 38

Tober Inc. operates a lumber yard. Tober purchases the raw materials for $50,000 and incurs additional processing costs of $35,000 to obtain three observable joint products. Further processing and final sales values for the products are as follows: What is the amount of joint costs assigned to the 25 ft board using the net realizable value (NRV) method? (Round the nearest whole dollar)

A)$40,000.
B)$21,250.
C)$25,449.
D)$26,772.

Question 39

Tober Inc. operates a lumber yard. Tober purchases the raw materials for $50,000 and incurs additional processing costs of $35,000 to obtain three observable joint products.Further processing and final sales values for the products are as follows: What is the amount of joint costs assigned to the 30 ft board using the net realizable value (NRV) method? (Round the nearest whole dollar)

A)$43,000.
B)$25,500.
C)$27,994.
D)$28,780.

Question 40

Tober Inc. operates a lumber yard. Tober purchases the raw materials for $50,000 and incurs additional processing costs of $35,000 to obtain three observable joint products. Further processing and final sales values for the products are as follows: What is the amount of joint costs assigned to the 50 ft board using the net realizable value (NRV) method? (Round the nearest whole dollar)

A)$44,000.
B)$29,449.
C)$31,557.
D)$38,250.

Question 41

Tober Inc. operates a lumber yard. Tober purchases the raw materials for $50,000 and incurs additional processing costs of $35,000 to obtain three observable joint products. Further processing and final sales values for the products are as follows: What is the gross margin for the 25 ft board using the net realizable value (NRV) method to allocate joint costs? (Round the nearest whole dollar)

A)$40,000.
B)$50,000.
C)$13,228.
D)$26,772.

Question 42

Tober Inc. operates a lumber yard. Tober purchases the raw materials for $50,000 and incurs additional processing costs of $35,000 to obtain three observable joint products. Further processing and final sales values for the products are as follows: What is the gross margin for the 30 ft board using the net realizable value (NRV) method to allocate joint costs? (Round the nearest whole dollar)

A)$43,000.
B)$55,000.
C)$14,220.
D)$28,780.

Question 43

Tober Inc. operates a lumber yard. Tober purchases the raw materials for $50,000 and incurs additional processing costs of $35,000 to obtain three observable joint products. Further processing and final sales values for the products are as follows: What is the gross margin for the 50 ft board using the net realizable value (NRV) method to allocate joint costs? (Round the nearest whole dollar)

A)$44,000.
B)$62,000.
C)$14,551.
D)$29,449.

Question 44

Expo manufacturing produces four different drinks. The joint process incurs costs of $250,000. The following information is related to the four products. Using the physical quantities methods of allocating joint costs, how much joint costs would be allocated to Beatle? (Round the nearest whole dollar)

A)$33,333.
B)$39,007.
C)$70,362.
D)$100,000.

Question 45

Expo manufacturing produces four different drinks. The joint process incurs costs of $250,000. The following information is related to the four products. Using the physical quantities methods of allocating joint costs, how much joint costs would be allocated to Grasshopper? (Round the nearest whole dollar)

A)$50,000.
B)$53,191.
C)$63,966.
D)$75,000.

Question 46

Expo manufacturing produces four different drinks. The joint process incurs costs of $250,000. The following information is related to the four products. Using the physical quantities methods of allocating joint costs, how much joint costs would be allocated to Locust? (Round the nearest whole dollar)

A)$50,000.
B)$62,367.
C)$66,667.
D)$69,149.

Question 47

Expo manufacturing produces four different drinks. The joint process incurs costs of $250,000. The following information is related to the four products. Using the physical quantities methods of allocating joint costs, how much joint costs would be allocated to Buggy? (Round the nearest whole dollar)

A)$25,000.
B)$53,305.
C)$88,652.
D)$100,000.

Question 48

Sky airlines produces two different aircrafts. The joint process incurs costs of $10 million. Both aircrafts can be sold at split-off or processed further to increase the final sales value. The following information is related to the two products. (all costs are recorded in millions) If the sales price at split-off provided is reliable, what are the joint costs allocated to B752, using the appropriate method of allocation?

A)$4.26 million.
B)$4.50 million.
C)$4.67 million.
D)$5 million.

Question 49

Sky airlines produces two different aircrafts. The joint process incurs costs of $10 million. Both aircrafts can be sold at split-off or processed further to increase the final sales value. The following information is related to the two products. (all costs are recorded in millions) If the sales price at split-off provided is reliable, what is the gross margin for B752, using the appropriate method of allocation?

A)$215 million.
B)$215.5 million.
C)$215.74 million.
D)$220 million.

Question 50

Sky airlines produces two different aircrafts. The joint process incurs costs of $10 million. Both aircrafts can be sold at split-off or processed further to increase the final sales value. The following information is related to the two products. (all costs are recorded in millions) If the sales price at split-off provided is reliable, what is the joint costs allocated to B797, using the appropriate method of allocation?

A)$5 million.
B)$5.33 million.
C)$5.50 million.
D)$5.74 million.

Question 51

Sky airlines produces two different aircrafts. The joint process incurs costs of $10 million. Both aircrafts can be sold at split-off or processed further to increase the final sales value. The following information is related to the two products. (all costs are recorded in millions) If the sales price at split-off provided is reliable, what is the gross margin for B797, using the appropriate method of allocation?

A)$214.26 million.
B)$214.50 million.
C)$215 million.
D)$220 million.

Question 52

Sky airlines produces two different aircrafts. The joint process incurs costs of $10 million. Both aircrafts can be sold at split-off or processed further to increase the final sales value. The following information is related to the two products. (all costs are recorded in millions) If the sales price at split-off provided is not reliable, but the final sales value and further processing costs are reliable, what is the joint costs allocated to B752 using the appropriate method of allocation?

A)$4.26 million.
B)$4.50 million.
C)$4.67 million.
D)$5 million.

Question 53

Sky airlines produces two different aircrafts. The joint process incurs costs of $10 million. Both aircrafts can be sold at split-off or processed further to increase the final sales value. The following information is related to the two products. (all costs are recorded in millions) If the sales price at split-off provided is not reliable, but the final sales value and further processing costs are reliable, what is the gross margin for B752 using the appropriate method of allocation?

A)$215 million.
B)$215.5 million.
C)$215.74 million.
D)$220 million.

Question 54

Sky airlines produces two different aircrafts. The joint process incurs costs of $10 million. Both aircrafts can be sold at split-off or processed further to increase the final sales value. The following information is related to the two products. (all costs are recorded in millions) If the sales price at split-off provided is not reliable, but the final sales value and further processing costs are reliable, what is the joint costs allocated to B797 using the appropriate method of allocation?

A)$5 million.
B)$5.33 million.
C)$5.50 million.
D)$5.74 million.

Question 55

Sky airlines produces two different aircrafts. The joint process incurs costs of $10 million. Both aircrafts can be sold at split-off or processed further to increase the final sales value. The following information is related to the two products. (all costs are recorded in millions) If the sales price at split-off provided is not reliable, but the final sales value and further processing costs are reliable, what is the gross margin for B797 using the appropriate method of allocation?

A)$214.26 million.
B)$214.50 million.
C)$215 million.
D)$220 million.

Question 56

Sky airlines produces two different aircrafts. The joint process incurs costs of $10 million. Both aircrafts can be sold at split-off or processed further to increase the final sales value. The following information is related to the two products. (all costs are recorded in millions) If the sales price at split-off and the final sales values provided are not reliable, what is the joint costs allocated to B752 using the appropriate method of allocation?

A)$4.26 million.
B)$4.50 million.
C)$4.67 million.
D)$5 million.

Question 57

Sky airlines produces two different aircrafts. The joint process incurs costs of $10 million. Both aircrafts can be sold at split-off or processed further to increase the final sales value. The following information is related to the two products. (all costs are recorded in millions) If the sales price at split-off and the final sales values provided are not reliable, what is the gross margin for B752 using the appropriate method of allocation

A)$215 million.
B)$215.5 million.
C)$215.74 million.
D)$220 million.

Question 58

Sky airlines produces two different aircrafts. The joint process incurs costs of $10 million. Both aircrafts can be sold at split-off or processed further to increase the final sales value. The following information is related to the two products. (all costs are recorded in millions) If the sales price at split-off and the final sales values provided are not reliable, what is the joint costs allocated to B797 using the appropriate method of allocation?

A)$5 million.
B)$5.33 million.
C)$5.50 million.
D)$5.74 million.

Question 59

Sky airlines produces two different aircrafts. The joint process incurs costs of $10 million. Both aircrafts can be sold at split-off or processed further to increase the final sales value. The following information is related to the two products. (all costs are recorded in millions) If the sales price at split-off and the final sales values provided are not reliable, what is the gross margin for B797 using the appropriate method of allocation

A)$214.26 million.
B)$214.50 million.
C)$215 million.
D)$220 million.

Question 60

When deciding the point at which a product should be sold to maximize profits in a joint product costing and analysis, which one of the following costs is relevant?

A)Separable costs after the split-off point.
B)Sales salaries for the period when the units were produced.
C)Joint costs to the split-off point.
D)Purchase costs of the materials required for the joint products.

Question 61

When considering whether to sell or process a product further, joint costs

A)are essential the decision-making process.
B)are considered sunk costs.
C)will change depending on which decision is made.
D)are considered opportunity costs.

Question 62

Another term for joint costs is

A)future costs.
B)opportunity costs.
C)incremental costs
D)sunk costs.

Question 63

Joint costs are only relevant

A)when deciding whether to sell or process further.
B)when considering the opportunity costs.
C)at the split-off point.
D)when producing the final product(s).

Question 64

When deciding whether to sell or process further, companies will use

A)joint costs.
B)separable costs.
C)the net realizable value.
D)the incremental costs.

Question 65

Which of the following statements is false regarding an incremental analysis?

A)If the sales value at split-off is greater than the NRV, sell after further processing.
B)If the sales value at split-off is less than the NRV, sell after further processing.
C)If the sales value at split-off is greater than the NRV, sell it without further processing.
D)The sales value at split-off and the NRV need to be analyzed to determine whether to sell or process further.

Question 66

When a company is deciding whether to sell at split-off or process further, all the following assumptions are made except:

A)The marketplace has been assessed, and there is sufficient demand to meet the company's target income.
B)The decision is aligned with the organizational objectives.
C)The company has the capacity and capability to process the product further.
D)The decision will lead the company towards minimizing profits.

Question 67

FlyDucks is deciding whether to sell its current model as is or process it further to create an enhanced model. The unit cost of the current model is $24 and would sell for $52. The company would incur further processing costs of $17 per unit and would sell for $68. What should FlyDucks do?

A)Process further, the company will make an additional $23 per unit.
B)Process further, the company will make an additional $11 per unit.
C)Sell the current model, the company will show an increased profit of $1 per unit.
D)Sell the current model, the company will show an increased profit of $16 per unit.

Question 68

Coyote Company spent $8,000 to produce its new device. This new device can be sold as-is for $10,000 or processed further at an additional cost of $3,000 and will then be sold for $14,000. Which amounts are relevant to the decision about the new device?

A)$8,000, $10,000, $3,000 and $14,000.
B)$10,000, $3,000 and $14,000.
C)$8,000, $3,000 and $14,000.
D)$8,000, $10,000, and $14,000.

Question 69

Stars Unlimited produces four products through a joint process that incurs costs of $150,000. Information for these products is as follows: Which, if any, products should be processed further?

A)All products should be processed further.
B)Gemini and Taurus should be processed further.
C)Gemini, Virgo, and Leo should be processed further.
D)Gemini, Taurus, and Leo should be processed further.

Question 70

Stars Unlimited produces four products through a joint process that incurs costs of $150,000. Information for these products is as follows: If Gemini is processed further, profits will

A)increase by $2,500.
B)decrease by $2,500.
C)increase by $12,500.
D)increase by $10,000.

Question 71

Stars Unlimited produces four products through a joint process that incurs costs of $150,000. Information for these products is as follows: If Taurus is processed further, profits will

A)increase by $2,000.
B)decrease by $2,000.
C)increase by $32,000.
D)increase by $30,000.

Question 72

Stars Unlimited produces four products through a joint process that incurs costs of $150,000. Information for these products is as follows: If Leo is processed further, profits will

A)increase by $1,000.
B)decrease by $1,000.
C)increase by $21,000.
D)increase by $20,000.

Question 73

Stars Unlimited produces four products through a joint process that incurs costs of $150,000. Information for these products is as follows: If Virgo is processed further, profits will

A)increase by $1,000.
B)decrease by $1,000.
C)increase by $39,000.
D)increase by $40,000.

Question 74

The Sweete Shoppe produces a variety of sweet treats. Several treats can be sold at split-off or further processed to produce a different type of treat. The following three treats are all produced in a joint processing operation at a cost of $63,000. The costs are allocated based on pounds produced. Information for these treats is as follows: Which, if any, products should be processed further?

A)Berry Delight only.
B)Berry Delight and Chocolate Wonder.
C)Caramel Chip only.
D)Berry Delight and Caramel Chip.

Question 75

The Sweete Shoppe produces a variety of sweet treats. Several treats can be sold at split-off or further processed to produce a different type of treat. The following three treats are all produced in a joint processing operation at a cost of $63,000. The costs are allocated based on pounds produced. Information for these treats is as follows: The net increase or decrease in profits of processing all the treats further is

A)an increase of $41,300.
B)a decrease of $41,300.
C)an increase of $21,700.
D)a decrease of $21,700.

Question 76

The Sweete Shoppe produces a variety of sweet treats. Several treats can be sold at split-off or further processed to produce a different type of treat. The following three treats are all produced in a joint processing operation at a cost of $63,000. The costs are allocated based on pounds produced. Information for these treats is as follows: Assuming the company correctly identifies which product(s) to process further, what will be the company's increase in profits by further processing the identified product(s)?

A)$41,300.
B)$51,500.
C)$19,453.
D)$39,220.

Question 77

The Sweete Shoppe produces a variety of sweet treats. Several treats can be sold at split-off or further processed to produce a different type of treat. The following three treats are all produced in a joint processing operation at a cost of $63,000. The costs are allocated based on pounds produced. Information for these treats is as follows: The net increase or decrease in profits of processing Berry Delight further is

A)an increase of $38,000.
B)a decrease of $38,000.
C)an increase of $19,453.
D)a decrease of $19,453.

Question 78

The Sweete Shoppe produces a variety of sweet treats. Several treats can be sold at split-off or further processed to produce a different type of treat. The following three treats are all produced in a joint processing operation at a cost of $63,000. The costs are allocated based on pounds produced. Information for these treats is as follows: The net increase or decrease in profits of processing Chocolate Wonder further is

A)an increase of $19,766.
B)a decrease of $19,766.
C)an increase of $13,500.
D)a decrease of $13,500.

Question 79

The Sweete Shoppe produces a variety of sweet treats. Several treats can be sold at split-off or further processed to produce a different type of treat. The following three treats are all produced in a joint processing operation at a cost of $63,000. The costs are allocated based on pounds produced. Information for these treats is as follows: The net increase or decrease in profits of processing Caramel Chip further is

A)an increase of $21,387.
B)a decrease of $21,387.
C)an increase of $10,200.
D)a decrease of $10,200.

Question 80

The Sweete Shoppe produces a variety of sweet treats. Several treats can be sold at split-off or further processed to produce a different type of treat. The following three treats are all produced in a joint processing operation at a cost of $63,000. The costs are allocated based on pounds produced. Information for these treats is as follows: The joint processing costs for these treats

A)should be allocated to the treats to determine whether they should be sold at split-off or processed further.
B)should be ignored in determining whether they should be sold at split-off or processed further.
C)should be ignored in making all product decisions.
D)are never included in the product costs and can mislead management in the decision-making process.