Deck 16: Cost Allocation: Joint Products and Byproducts

Question 1

Separable costs include manufacturing costs only.

Answer 1

False

Question 2

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

A) before the splitoff point
B) after the splitoff point
C) at the splitoff point
D) at the end of production

Answer 2

C

Question 3

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

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.

Answer 3

C

Question 4

Joint costs are the costs of a production process that yields multiple products simultaneously.

Question 5

Which of the following statements is true of joint costing?

A) The costs of a production process that yields multiple products simultaneously are called joint costs.
B) Distribution costs incurred beyond the splitoff point that are assignable to each of the specific products identified at the splitoff point are considered as joint costs.
C) The primary purpose of joint costing is to allocate the separable costs to the individual products that are eventually sold.
D) Joint costing is less useful for companies which manufacture multiple products simultaneously from the same production process.

Question 6

Joint costs are incurred beyond the splitoff point and are assignable to individual products.

Question 7

Which of the following statements is true of joint production process and its components?

A) Distribution costs incurred beyond the splitoff point assignable to each of the specific products identified at the splitoff point are considered as joint costs.
B) Decisions relating to the sale or further processing of each identifiable product can be made independently of decisions about the other products beyond the splitoff point.
C) When a joint production process yields two or more products with low total sales values relative to the total sales values of other products, those products are called joint products.
D) The primary purpose of joint costing is to allocate the separable costs to the individual products that are eventually sold.

Question 8

The products of a joint production process that have low total sales values compared with the total sales value of the main product are called ________.

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

Question 9

Outputs with a negative sales value are ________.

A) added to cost of goods sold
B) added to joint production costs and allocated to joint or main products
C) added to joint production costs and allocated to byproducts and scrap
D) subtracted from product revenue

Question 10

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

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

Question 11

In joint costing,which of the following changes may lead to a change in product classification?

A) main product sales price increases due to a new application
B) byproduct sales price decreases due to a new government regulation
C) main product becomes technologically obsolete
D) byproduct loses its market due to a new invention

Question 12

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

A) Number of units per processing period
B) Weight or volume of outputs per period
C) Percentage of total sales value
D) Joint costs incurred up to the splitoff point

Question 13

The juncture in a joint production process when two products become separable is the byproduct point.

Question 14

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

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 15

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

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

Question 16

When a single manufacturing process yields two products,one of which has a relatively high sales value compared to the other,the two products are respectively known as ________.

A) joint products and byproducts
B) joint products and scrap
C) main products and byproducts
D) main products and joint products

Question 17

Which of the following statements best define joint products?

A) When one product has a high total sales value compared with the total sales value of other products of the process, that product is called a joint product.
B) Product of a joint production process that have the same sales value compared with the total sales value of the by products is called a joint product.
C) When one product has a low total sales value compared with the total sales value of other products of the process, that product is called a joint product.
D) When a joint production process yields two or more products with high total sales values relative to the total sales values of other products, those products are called joint products.

Question 18

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

Question 19

Classification of main products,joint products,and byproducts can always be done with ease.

Question 20

Before the splitoff point,decisions relating to the sale or further processing of each identifiable product cannot be made independently of decisions about the other products.

Question 21

If the value of a byproduct drops significantly,it could also be viewed as a joint product.

Question 22

All products yielded from joint product processing have some positive value to the firm.

Question 23

A business which enters into a contract to purchase a product which compensates the manufacturer under a cost reimbursement agreement should take an active part in the determination of how joint costs are allocated because ________.

A) the manufacturer may allocate a large portion of its other costs to these products
B) the business need those information for its tax reporting purposes
C) the FASB requires the business to participate in the cost allocation process
D) it is an opportunity for the business to enhance its market knowledge

Question 24

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.

Question 25

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

Question 26

What are joint costs,separable costs,and a splitoff point?

Question 27

Allocating joint costs to individual products can be helpful for litigation settlement purposes in which the costs of joint products or services are key inputs.

Question 28

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?

Question 29

In each of the following industries,identify possible joint (or severable)products at the splitoff point.
a.Coal
b.Petroleum
c.Dairy
d.Lamb
e.Lumber
f.Cocoa Beans
g.Christmas Trees
h.Salt
i.Cowhide

Question 30

When a joint production process yields two or more products with high total sales values,these products are called joint products.

Question 31

Discuss in brief how easy it is for companies to classify products as main products,joint products,and byproducts.

Question 32

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

A) The net realizable value method uses the sales value of the units sold during the accounting period to allocate joint costs.
B) The sales value at splitoff method always results in the same gross-margin percentage for all products.
C) The sales value at splitoff method allocates joint costs to each product in proportion to the sales value of total production.
D) The net realizable value method results in the same joint production cost per unit for all products.

Question 33

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

Question 34

The sales value at splitoff method ________.

A) allocates joint costs to joint products on the basis of the relative total sales value at the splitoff point
B) allocates joint costs to joint products on the basis of a comparable physical measure at the splitoff point
C) allocates joint costs to joint products on the basis of relative NRV
D) allocates joint costs to joint products in a way that each product has an identical gross-margin percentage

Question 35

An example of allocating joint costs using physical measures is allocating joint costs based on ________.

A) sales value at splitoff point
B) volume of the products
C) constant gross-margin percentage
D) net realizable value

Question 36

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

A) Constant gross-margin percentage method results in same joint production cost per unit for all products.
B) Estimated net realizable value method results in same gross margin percentage for all products.
C) Present value allocation method is the least preferred method due to its complex calculations.
D) Sales value at splitoff method uses the sales value of the entire production of the accounting period to allocate costs.

Question 37

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?

Question 38

Which of the following is a possible reason to allocate joint costs to individual products?

A) rate regulation requirements
B) to prepare financial statements
C) for product design decisions
D) to determine tax rates

Question 39

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

Question 40

In joint costing,which of the following is a market-based approach to allocating costs?

A) sales units
B) units of production
C) physical measures
D) net realizable value

Question 41

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.

-What are the physical-volume proportions for products Standard and Premium,respectively?

A) 60.00% and 40.00%
B) 55.00% and 45.00%
C) 60.61% and 39.39%
D) 54.00% and 46.00%

Question 42

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?

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

Question 43

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.

-If the sales value at splitoff method is used,what is the approximate production cost for each paper sheet?

A) $0.309
B) $0.301
C) $0.031
D) $0.039

Question 44

The net realizable value method ________.

A) allocates joint costs to joint products on the basis of a comparable physical measure at the splitoff point
B) allocates joint costs to joint products on the basis of the relative sales value at the splitoff point
C) allocates joint costs to joint products in a way that each product has an identical gross-margin percentage
D) allocates joint costs to joint products on the basis of relative NRV

Question 45

Answer the following questions using the information below:
The Alfarm Corporation processes raw milk up to the splitoff point where two products, cream and liquid skim, are produced and sold. There was no beginning inventory. The following material was collected for the month of February:
$\begin{array}{lll}\text { Direct materials processed: } && 750,000 \text { gallons }(727,500 \text { gallons of good product) } \\\text { Production: } & \text { Cream } & 442,500 \text { gallons } \\& \text { Liquid skim } & 285,000 \text { gallons } \\\text { Sales: } & \text { Cream } & 421,500 \text { at } \$ 110 \text { per gallon } \\& \text { Liquid skm } & 273,000 \text { at } \$ 100 \text { per gallon }\end{array}$ The cost of purchasing 750,000 gallons of direct materials and processing it up to the splitoff point to yield a total of 727,500 gallons of good product was $2,280,000.

-When using the physical-volume method,what is Cream's approximate production cost per gallon?

A) $3.03
B) $3.31
C) $3.13
D) $3.21

Question 46

Which of the following statements is true in regard to the cause-and-effect relationship between allocated joint costs and individual products?

A) A high individual product value results in a high level of joint costs.
B) A low individual product value results in a low level of joint costs.
C) A high individual product value results in a low level of joint costs.
D) There is no cause-and-effect relationship.

Question 47

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

Question 48

Answer the following questions using the information below:
The Alfarm Corporation processes raw milk up to the splitoff point where two products, cream and liquid skim, are produced and sold. There was no beginning inventory. The following material was collected for the month of February:
$\begin{array}{lll}\text { Direct materials processed: } && 750,000 \text { gallons }(727,500 \text { gallons of good product) } \\\text { Production: } & \text { Cream } & 442,500 \text { gallons } \\& \text { Liquid skim } & 285,000 \text { gallons } \\\text { Sales: } & \text { Cream } & 421,500 \text { at } \$ 110 \text { per gallon } \\& \text { Liquid skm } & 273,000 \text { at } \$ 100 \text { per gallon }\end{array}$ The cost of purchasing 750,000 gallons of direct materials and processing it up to the splitoff point to yield a total of 727,500 gallons of good product was $2,280,000.

-Which of the following statements about Alfarm's joint production costs is true?

A) The gross-margin percentage per gallon of Cream and Liquid skim are equal because joint costs are allocated based on the number of gallons.
B) The gross-margin percentage per gallon of Cream is higher than gross margin percentage per gallon of Liquid skim because of Cream's higher production volume.
C) The joint production cost per gallon of Cream and Liquid skim are equal because joint costs are allocated based on the number of gallons.
D) The joint production cost per gallon of Cream is higher than joint production cost per gallon of Liquid skim because of Cream's higher production volume.

Question 49

Answer the following questions using the information below:
The Berkel Corporation manufactures Widgets, Gizmos, and Turnbols from a joint process. June production is 5,000 widgets; 8,750 gizmos; and 10,000 turnbols. Respective per unit selling prices at splitoff are $75, $50, and $25. Joint costs up to the splitoff point are $187,500.
What amount of joint costs will be allocated to the Turnbols?

A) $44,118
B) $30,882
C) $77,206
D) $66,176

Question 50

Answer the following questions using the information below:
The Alfarm Corporation processes raw milk up to the splitoff point where two products, cream and liquid skim, are produced and sold. There was no beginning inventory. The following material was collected for the month of February:
$\begin{array}{lll}\text { Direct materials processed: } && 750,000 \text { gallons }(727,500 \text { gallons of good product) } \\\text { Production: } & \text { Cream } & 442,500 \text { gallons } \\& \text { Liquid skim } & 285,000 \text { gallons } \\\text { Sales: } & \text { Cream } & 421,500 \text { at } \$ 110 \text { per gallon } \\& \text { Liquid skm } & 273,000 \text { at } \$ 100 \text { per gallon }\end{array}$ The cost of purchasing 750,000 gallons of direct materials and processing it up to the splitoff point to yield a total of 727,500 gallons of good product was $2,280,000.

-When using a physical-volume measure,what is the approximate amount of joint costs that will be allocated to cream and liquid skim?

A) $1,386,804 and $893,196
B) $1,140,000 and $1,140,000
C) $1,368,000 and $912,000
D) $1,254,00 and $1,026,000

Question 51

Answer the following questions using the information below:
The Berkel Corporation manufactures Widgets, Gizmos, and Turnbols from a joint process. June production is 5,000 widgets; 8,750 gizmos; and 10,000 turnbols. Respective per unit selling prices at splitoff are $75, $50, and $25. Joint costs up to the splitoff point are $187,500.
If joint costs are allocated based upon the sales value at splitoff,what amount of joint costs will be allocated to the widgets?

A) $30,882
B) $66,176
C) $44,118
D) $77,206

Question 52

The physical-measure method ________.

A) allocates joint costs to joint products in a way that each product has an identical gross-margin percentage
B) allocates joint costs to joint products on the basis of a comparable physical measure at the splitoff point
C) allocates joint costs to joint products on the basis of the relative sales value at the splitoff point
D) allocates joint costs to joint products on the basis of relative NRV

Question 53

The benefits-received criteria for allocating joint costs indicate market-based measures are preferred because ________.

A) physical measures such as quantity are clear bases for allocating cost than other measures
B) physical measures are more difficult to calculate
C) revenues are usually the best indicators of the benefits received
D) revenues always remain consistent over short-run

Question 54

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%

Question 55

A reason why a physical-measure to allocate joint costs is less preferred than the sales value at splitoff is because ________.

A) a physical measure such as volume is difficult to estimate than sales value
B) physical volume usually has little relationship to the revenue producing power of products
C) a physical measure usually results in less costs being allocated to the product that weighs the most
D) customers will easily understand that the products are overpriced

Question 56

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.

-If the sales value at splitoff method is used,what is the approximate production cost for each pencil casing?

A) $0.309
B) $0.301
C) $0.031
D) $0.039

Question 57

Answer the following questions using the information below:
The Alfarm Corporation processes raw milk up to the splitoff point where two products, cream and liquid skim, are produced and sold. There was no beginning inventory. The following material was collected for the month of February:
$\begin{array}{lll}\text { Direct materials processed: } && 750,000 \text { gallons }(727,500 \text { gallons of good product) } \\\text { Production: } & \text { Cream } & 442,500 \text { gallons } \\& \text { Liquid skim } & 285,000 \text { gallons } \\\text { Sales: } & \text { Cream } & 421,500 \text { at } \$ 110 \text { per gallon } \\& \text { Liquid skm } & 273,000 \text { at } \$ 100 \text { per gallon }\end{array}$ The cost of purchasing 750,000 gallons of direct materials and processing it up to the splitoff point to yield a total of 727,500 gallons of good product was $2,280,000.

-What are the physical-volume proportions to allocate joint costs for cream and liquid skim,respectively?

A) 59.00% and 41.00%
B) 60.82% and 39.18%
C) 50.00% and 50.00%
D) 59.79% and 40.21%

Question 58

Answer the following questions using the information below:
The Berkel Corporation manufactures Widgets, Gizmos, and Turnbols from a joint process. June production is 5,000 widgets; 8,750 gizmos; and 10,000 turnbols. Respective per unit selling prices at splitoff are $75, $50, and $25. Joint costs up to the splitoff point are $187,500.
What amount of joint costs will be allocated to the Gizmos?

A) $44,118
B) $30,882
C) $77,206
D) $66,176

Question 59

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.

-If the sales value at splitoff method is used,what are the approximate joint costs assigned to ending inventory for paper?

A) $185.17
B) $57.87
C) $175.38
D) $57.78

Question 60

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

Question 61

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.

-What is the allocated joint costs of Butter Cream?

A) $33,700
B) $13,500
C) $34,500
D) $11,500

Question 62

Which of the following is true of the physical-measure approach of allocating joint costs?

A) Costs cannot be allocated if the measurement basis for each product are different.
B) Physical measures usually result in less costs being allocated to the product that weighs the most.
C) The physical measure reflects a product's ability to generate revenues.
D) Obtaining comparable physical measures for all products is always straightforward.

Question 63

Answer the following questions using the information below:
The Kenton 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: 18,000 gallons (after shrinkage)
$\begin{array}{|l|l|r|r|}\hline \text { Production: } & \text { Butter Cream } & 7,500 & \text { gallons } \\\hline & \text { Condensed Milk } & 10,500 & \text { gallons } \\\hline \text { Sales: } & \text { Butter Cream } & 7,000 & \text { gallons } \\\hline & \text { Condensed Milk } & 10,000 & \text { gallons } \\\hline \text { Sales Price: } & \text { Butter Cream } & \$ 3.5 & \text { per gallon } \\\hline & \text { Condensed Milk } & \$ 7.5 & \text { per gallon } \\\hline \begin{array}{l}\text { Separable costsin } \\\text { total: }\end{array} & \text { Butter Cream } & \$ 12,500 \\\hline & \text { Condensed Milk } & \$ 34,700\\\hline\end{array}$ The cost of purchasing the of unprocessed milk and processing it up to the splitoff point to yield a total of 18000 gallons of saleable product was $46,000.
The company uses constant gross-margin percentage NRV method to allocate the joint costs of production.

-What is the allocated joint costs of Butter Cream?

A) $35,200
B) $12,500
C) $34,700
D) $10,800

Question 64

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 Premium chips?

A) $768,182
B) $1,170,000
C) $975,000
D) $780,000

Question 65

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.

-How much (if any)extra income would Green earn if it produced and sold all of the Xyla from the condensed goat milk? Allocate joint processing costs based upon relative sales value on the splitoff.(Extra income means income in excess of what Green would have earned from selling condensed goat milk.)

A) $576,552
B) $132,250
C) $523,250
D) $181,968

Question 66

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 condensed goat milk at the splitoff point?

A) 51.74%
B) 50.00%
C) 35.83%
D) 48.26%

Question 67

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 liters (with 20% shrinkage)
$\begin{array}{lll}\text { Production: } & \text { A } & 1,500 \text { liters } \\& \text { B } & 500 \text { liters } \\\text { Sales: } & \text { A } & \$ 15.00 \text { per liter } \\& \text { B } & \$ 10.00 \text { per liter }\\\end{array}$ The cost of purchasing 2,500 liters of direct materials and processing it up to the splitoff point to yield a total of 2,000 liters 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 liters of Product Z5 for an additional processing cost of $150.Product Z5 is sold for $25.00 per liter.There was no beginning inventory and ending inventory was 125 liters.
Product B may be processed further to yield 375 liters of Product W3 for an additional processing cost of $275.Product W3 is sold for $30.00 per liter.There was no beginning inventory and ending inventory was 25 liters.
If Product Z5 and Product W3 are produced,what are the expected sales values of production,respectively?

A) $11,250 and $34,375
B) $22,500 and $ 5,000
C) $31,250 and $10,500
D) $34,375 and $11,250

Question 68

Cola 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 liters (with 20% shrinkage)
$\begin{array}{lll}\text { Production: } & \text { A } & 1,500 \text { liters } \\& \text { B } & 500 \text { liters } \\\text { Sales: } & \text { A } & \$ 15.00 \text { per liter } \\& \text { B } & \$ 10.00 \text { per liter }\\\end{array}$ The cost of purchasing 2,500 liters of direct materials and processing it up to the splitoff point to yield a total of 2,000 liters 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 liters of Product Z5 for an additional processing cost of $150.Product Z5 is sold for $25.00 per liter.There was no beginning inventory and ending inventory was 125 liters.
Product B may be processed further to yield 375 liters of Product W3 for an additional processing cost of $275.Product W3 is sold for $30.00 per liter.There was no beginning inventory and ending inventory was 25 liters.
What is Product Z5's estimated net realizable value at the splitoff point?

A) $11,100
B) $22,350
C) $34,225
D) $34,375

Question 69

Answer the following questions using the information below:
The Kenton 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: 18,000 gallons (after shrinkage)
$\begin{array}{|l|l|r|r|}\hline \text { Production: } & \text { Butter Cream } & 7,500 & \text { gallons } \\\hline & \text { Condensed Milk } & 10,500 & \text { gallons } \\\hline \text { Sales: } & \text { Butter Cream } & 7,000 & \text { gallons } \\\hline & \text { Condensed Milk } & 10,000 & \text { gallons } \\\hline \text { Sales Price: } & \text { Butter Cream } & \$ 3.5 & \text { per gallon } \\\hline & \text { Condensed Milk } & \$ 7.5 & \text { per gallon } \\\hline \begin{array}{l}\text { Separable costsin } \\\text { total: }\end{array} & \text { Butter Cream } & \$ 12,500 \\\hline & \text { Condensed Milk } & \$ 34,700\\\hline\end{array}$ The cost of purchasing the of unprocessed milk and processing it up to the splitoff point to yield a total of 18000 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 Kenton's joint cost allocations?

A) The gross margin is same for both products because constant gross margin percentage NRV method ignores profits earned before the splitoff point.
B) One product can receive negative joint costs allocations to bring the other unprofitable product to the overall average gross margin.
C) Kenton has chosen the easiest method for allocating its joint costs of production.
D) The gross profit percent of condensed milk is lower than the gross profit of butter cream.

Question 70

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 estimated net realizable value,what amount of the joint costs would be allocated Xyla and the skim goat ice cream?

A) $672,000 and $271,000
B) $131,464 and $53,016
C) $92,240 and $92,240
D) $144,480 and $72,140

Question 71

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 the skim goat ice cream at the splitoff point?

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

Question 72

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

A) Under the cause-and-effect criterion, the physical-measure method is highly desirable.
B) Byproducts are never excluded from the denominator used in the physical-measure method.
C) The NRV method is never used when the selling prices of joint products vary frequently.
D) The sales value at splitoff method follows the benefits-received criterion of cost allocation.

Question 73

Answer the following questions using the information below:
The Kenton 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: 18,000 gallons (after shrinkage)
$\begin{array}{|l|l|r|r|}\hline \text { Production: } & \text { Butter Cream } & 7,500 & \text { gallons } \\\hline & \text { Condensed Milk } & 10,500 & \text { gallons } \\\hline \text { Sales: } & \text { Butter Cream } & 7,000 & \text { gallons } \\\hline & \text { Condensed Milk } & 10,000 & \text { gallons } \\\hline \text { Sales Price: } & \text { Butter Cream } & \$ 3.5 & \text { per gallon } \\\hline & \text { Condensed Milk } & \$ 7.5 & \text { per gallon } \\\hline \begin{array}{l}\text { Separable costsin } \\\text { total: }\end{array} & \text { Butter Cream } & \$ 12,500 \\\hline & \text { Condensed Milk } & \$ 34,700\\\hline\end{array}$ The cost of purchasing the of unprocessed milk and processing it up to the splitoff point to yield a total of 18000 gallons of saleable product was $46,000.
The company uses constant gross-margin percentage NRV method to allocate the joint costs of production.

-What is the constant gross-margin percent for Kenton?

A) 10%
B) 6.3%
C) 11%
D) 6.5%

Question 74

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.

-What is the constant gross margin percent for Brital?

A) 15%
B) 22%
C) 20%
D) 30%

Question 75

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

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

Question 76

Answer the following questions using the information below:
The Kenton 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: 18,000 gallons (after shrinkage)
$\begin{array}{|l|l|r|r|}\hline \text { Production: } & \text { Butter Cream } & 7,500 & \text { gallons } \\\hline & \text { Condensed Milk } & 10,500 & \text { gallons } \\\hline \text { Sales: } & \text { Butter Cream } & 7,000 & \text { gallons } \\\hline & \text { Condensed Milk } & 10,000 & \text { gallons } \\\hline \text { Sales Price: } & \text { Butter Cream } & \$ 3.5 & \text { per gallon } \\\hline & \text { Condensed Milk } & \$ 7.5 & \text { per gallon } \\\hline \begin{array}{l}\text { Separable costsin } \\\text { total: }\end{array} & \text { Butter Cream } & \$ 12,500 \\\hline & \text { Condensed Milk } & \$ 34,700\\\hline\end{array}$ The cost of purchasing the of unprocessed milk and processing it up to the splitoff point to yield a total of 18000 gallons of saleable product was $46,000.
The company uses constant gross-margin percentage NRV method to allocate the joint costs of production.

-What is the allocated joint costs of Condensed Milk?

A) $35,200
B) $10,800
C) $12,500
D) $34,700

Question 77

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 gallons (10,000 gallons yield 9,500 gallons of good product and 500 gallons of shrinkage)
$\begin{array}{lll}\text { Production: } & X & 5,000 \text { gallons } \\& Y & 4,500 \text { gallons } \\\text { Sales: } & X & 4,750 \text { at } \$ 150 \text { per gallon } \\& Y & 4,000 \text { at } \$ 100 \text { per gallon }\end{array}$ The cost of purchasing 10,000 gallons of direct materials and processing it up to the splitoff point to yield a total of 9,500 gallons of good products was $975,000.
The beginning inventories totaled 50 gallons for X and 25 gallons for Y.Ending inventory amounts reflected 300 gallons of Product X and 525 gallons of Product Y.October costs per unit were the same as November.
Using the physical-volume method,what is Product X's approximate gross-margin percentage?

A) 32%
B) 34%
C) 35%
D) 38%

Question 78

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?

A) 51.74%
B) 50.00%
C) 35.83%
D) 48.26%

Question 79

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.

-How much (if any)extra income would Green earn if it produced and sold skim milk ice cream from goats rather than goat skim milk? Allocate joint processing costs based upon the relative sales value at the splitoff point.

A) $132,250
B) $576,552
C) $523,250
D) $181,968

Question 80

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?

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