Question 1

Joint costing allocates the joint costs to the individual products that are eventually sold.

Accepted Answer

A) True 
 B)False

Question 2

Which of the following statements best define splitoff point in joint costing?

Accepted Answer

A)  It is the point at which managers decide to discontinue one or more of the products. 
B)  It is the point at which the managers decide to outsource some of its production processes. 
C)  It is the juncture in a joint production process when two or more products become separately identifiable. 
D)  It is the juncture at which decisions determining joint costs of various products to be produced are taken.

Question 3

In joint costing,the potential conflict between cost concepts used for decision making and cost concepts used for evaluating the performance of managers will be most severe when the ________ method is used.

Accepted Answer

A)  sales value at splitoff 
B)  physical measure 
C)  constant gross-margin percentage NRV 
D)  estimated NRV

Question 4

List the reasons that the sales value at splitoff method of joint cost allocation should be used.

Accepted Answer

The answer of List the reasons that the sales value...

Question 5

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 for paper?

Accepted Answer

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

Question 6

What type of cost is the result of an event that results in more than one product or service simultaneously?

Accepted Answer

A)  byproduct cost 
B)  joint cost 
C)  main cost 
D)  separable cost

Question 7

Answer the following questions using the information below:
The Green 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:
 $\text { Direct Materials processed: } \quad 98,000 \text { gallons (after shrinkage) }$
$\begin{array}{lll}
\text { Proauction: } & \text { Condensed goat milk } & 42,500 \text { gallons } \
& \text { Skim goat milk } & 55,500 \text { gallons } \
\text { Sales: } & \text { Condensed goat milk } & \$ 3.50 \text { per gallon } \
&\text { skim goat milk } & \$ 2.50 \text { per gallon }
\end{array}$ The costs of purchasing the of unprocessed goat milk and processing it up to the splitoff point to yield a total of 98,000 gallons of saleable product was $184,480. There were no inventory balances of either product.
Condensed goat milk may be processed further to yield 42,000 gallons (the remainder is shrinkage) of a medicinal milk product, Xyla, for an additional processing cost of $4 per usable gallon. Xyla can be sold for $20 per gallon.
Skim goat milk can be processed further to yield 54,200 gallons of skim goat ice cream, for an additional processing cost per usable gallon of $4. The product can be sold for $9 per gallon.
There are no beginning and ending inventory balances.
-What is the estimated net realizable value of Xyla at the splitoff point?

Accepted Answer

A)  $271,000 
B)  $287,400 
C)  $672,000 
D)  $712,600

Question 8

Separable costs that do not differ between alternatives are irrelevant for decision making.

Accepted Answer

A) True 
 B)False

Question 9

Which of the following statements is true of main products and byproducts?

Accepted Answer

A)  A byproduct will never become a main product. 
B)  A main product will never become a byproduct. 
C)  Product classifications may change over time. 
D)  Product classifications remains constant over time.

Question 10

Products with a relatively low sales value are known as ________.

Accepted Answer

A)  primary products 
B)  main products 
C)  joint products 
D)  byproducts

Question 11

Answer the following questions using the information below:
The Green 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:
 $\text { Direct Materials processed: } \quad 98,000 \text { gallons (after shrinkage) }$
$\begin{array}{lll}
\text { Proauction: } & \text { Condensed goat milk } & 42,500 \text { gallons } \
& \text { Skim goat milk } & 55,500 \text { gallons } \
\text { Sales: } & \text { Condensed goat milk } & \$ 3.50 \text { per gallon } \
&\text { skim goat milk } & \$ 2.50 \text { per gallon }
\end{array}$ The costs of purchasing the of unprocessed goat milk and processing it up to the splitoff point to yield a total of 98,000 gallons of saleable product was $184,480. There were no inventory balances of either product.
Condensed goat milk may be processed further to yield 42,000 gallons (the remainder is shrinkage) of a medicinal milk product, Xyla, for an additional processing cost of $4 per usable gallon. Xyla can be sold for $20 per gallon.
Skim goat milk can be processed further to yield 54,200 gallons of skim goat ice cream, for an additional processing cost per usable gallon of $4. The product can be sold for $9 per gallon.
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)  51.74% 
B)  50.00% 
C)  35.83% 
D)  48.26%

Question 12

The constant gross-margin percentage NRV method is the only method whereby products can receive negative allocations.

Accepted Answer

A) True 
 B)False

Question 13

The net realizable value (NRV)method method allocates joint costs to joint products produced during the accounting period in such a way that each individual product achieves an identical gross-margin percentage.

Accepted Answer

A) True 
 B)False

Question 14

Answer the following questions using the information below:
The Brital Company processes unprocessed milk to produce two products, Butter Cream and Condensed Milk. The following information was collected for the month of June:
Direct Materials processed: 28,000 gallons
 $$\begin{array} { | l | l | r | r | } 
\hline \text { production: } & \text { butter Cream } & 12,500 & \text { gallons } \
\hline & \text { Condensed Milk } & 15,500 & \text { gallons } \
\hline \text { Sales: } & \text { Gutter Cream } & 12,000 & \text { gallons } \
\hline & \text { Condensed Milk } & 15,006 & \text { gallons } \
\hline \text { Sales: } & \text { butter Cream } & \$ 2.5 & \text { per gallon } \
\hline & \text { Condensed Milk } & \$ 5.5 & \text { per gallon } \
\hline \text { Separable costs in } & & & \
\text { total: } & \text { butter Cream } & \$ 13,500 & \
\hline  & \text { Condensed Milk } & \$ 33,708 & \
\hline
\end{array}$$ The costs of purchasing the of unprocessed milk and processing it up to the splitoff point to yield a total of 28,000 gallons of saleable product was $46,000.
The company uses constant gross-margin percentage NRV method to allocate the joint costs of production.
-If separable costs of Butter Cream was 16,000 and constant gross margin was 25%,what would have been the total allocated joint costs of production?

Accepted Answer

A)  $37,675 
B)  $33,700 
C)  $30,238 
D)  $34,500

Question 15

Answer the following questions using the information below:
The Brital Company processes unprocessed milk to produce two products, Butter Cream and Condensed Milk. The following information was collected for the month of June:
Direct Materials processed: 28,000 gallons
 $$\begin{array} { | l | l | r | r | } 
\hline \text { production: } & \text { butter Cream } & 12,500 & \text { gallons } \
\hline & \text { Condensed Milk } & 15,500 & \text { gallons } \
\hline \text { Sales: } & \text { Gutter Cream } & 12,000 & \text { gallons } \
\hline & \text { Condensed Milk } & 15,006 & \text { gallons } \
\hline \text { Sales: } & \text { butter Cream } & \$ 2.5 & \text { per gallon } \
\hline & \text { Condensed Milk } & \$ 5.5 & \text { per gallon } \
\hline \text { Separable costs in } & & & \
\text { total: } & \text { butter Cream } & \$ 13,500 & \
\hline  & \text { Condensed Milk } & \$ 33,708 & \
\hline
\end{array}$$ The costs of purchasing the of unprocessed milk and processing it up to the splitoff point to yield a total of 28,000 gallons of saleable product was $46,000.
The company uses constant gross-margin percentage NRV method to allocate the joint costs of production.
-Which of the following statements is true of Brital?

Accepted Answer

A)  The gross profit percent of condensed milk is lower than the gross profit of butter cream. 
B)  The gross margin is same for both products because constant gross margin percentage NRV method ignores profits earned before the splitoff point. 
C)  The gross profit of condensed milk is lower than the gross profit of butter cream. 
D)  The gross margin is allocated to the joint products in order to determine the joint-cost allocations.

Question 16

The only allowable method of joint cost allocation is specified by FASB.

Accepted Answer

A) True 
 B)False

Question 17

Which of the methods of allocating joint costs usually is considered the simplest to implement?

Accepted Answer

A)  estimated net realizable value 
B)  constant gross-margin percentage NRV 
C)  sales value at splitoff 
D)  physical measures

Question 18

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

Accepted Answer

The answer of Explain the difference between a joint product...

Question 19

What revenue or expense amounts are necessary to make a sell-or-process-further decision and why? What items are irrelevant to the decision and why?

Accepted Answer

The answer of What revenue or expense amounts are necessary...

Question 20

What are the reasons for allocating joint costs to individual products or services?

Accepted Answer

The answer of What are the reasons for allocating joint...

Exam 16: Cost Allocation: Joint Products and Byproducts

Joint costing allocates the joint costs to the individual products that are eventually sold.

Which of the following statements best define splitoff point in joint costing?

In joint costing,the potential conflict between cost concepts used for decision making and cost concepts used for evaluating the performance of managers will be most severe when the ________ method is used.

List the reasons that the sales value at splitoff method of joint cost allocation should be used.

What type of cost is the result of an event that results in more than one product or service simultaneously?

Separable costs that do not differ between alternatives are irrelevant for decision making.

Which of the following statements is true of main products and byproducts?

Products with a relatively low sales value are known as ________.

The constant gross-margin percentage NRV method is the only method whereby products can receive negative allocations.

The net realizable value (NRV)method method allocates joint costs to joint products produced during the accounting period in such a way that each individual product achieves an identical gross-margin percentage.

The only allowable method of joint cost allocation is specified by FASB.

Which of the methods of allocating joint costs usually is considered the simplest to implement?

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

What revenue or expense amounts are necessary to make a sell-or-process-further decision and why? What items are irrelevant to the decision and why?

What are the reasons for allocating joint costs to individual products or services?