Use the information below to answer the following question(s).Chem Manufacturing Company processes direct materials up to the splitoff point, where two products (X and Y)are obtained and sold.The following information was collected for the month of November.Direct materials processed:
10,000 litres (10,000 litres yield 9,500 litres of good product and 500 litres of shrinkage)
The cost of purchasing 10,000 litres of direct materials and processing it up to the splitoff point to yield a total of 9,500 litres of good products was $975,000.The beginning inventories totalled 50 litres for X and 25 litres for Y.Ending inventory amounts reflected 300 litres of product X and 525 litres of product Y.October costs were per unit were the same as November.
-An advantage of the sales value at splitoff method is
A)the fact that it can be supported subjectively.
B)the fact that only a few assumptions are required beyond the splitoff point.
C)the fact that there may not be a ready market at the splitoff point.
D)it always yields the same results as the gross margin percentage method.
E)the cost allocation base is well understood.

Question

Use the information below to answer the following question(s).Chem Manufacturing Company processes direct materials up to the splitoff point, where two products (X and Y)are obtained and sold.The following information was collected for the month of November.Direct materials processed:
10,000 litres (10,000 litres yield 9,500 litres of good product and 500 litres of shrinkage)
  The cost of purchasing 10,000 litres of direct materials and processing it up to the splitoff point to yield a total of 9,500 litres of good products was $975,000.The beginning inventories totalled 50 litres for X and 25 litres for Y.Ending inventory amounts reflected 300 litres of product X and 525 litres of product Y.October costs were per unit were the same as November.
-An advantage of the sales value at splitoff method is
A)the fact that it can be supported subjectively. 
B)the fact that only a few assumptions are required beyond the splitoff point. 
C)the fact that there may not be a ready market at the splitoff point. 
D)it always yields the same results as the gross margin percentage method. 
E)the cost allocation base is well understood.

Quizplus · Accepted Answer

The Answer of Use the information below to answer the following question(s).Chem Manufacturing Company processes direct materials up to the splitoff point, where two products (X and Y)are obtained and sold.The following information was collected for the month of November.Direct materials processed:
10,000 litres (10,000 litres yield 9,500 litres of good product and 500 litres of shrinkage)
  The cost of purchasing 10,000 litres of direct materials and processing it up to the splitoff point to yield a total of 9,500 litres of good products was $975,000.The beginning inventories totalled 50 litres for X and 25 litres for Y.Ending inventory amounts reflected 300 litres of product X and 525 litres of product Y.October costs were per unit were the same as November.
-An advantage of the sales value at splitoff method is
A)the fact that it can be supported subjectively. 
B)the fact that only a few assumptions are required beyond the splitoff point. 
C)the fact that there may not be a ready market at the splitoff point. 
D)it always yields the same results as the gross margin percentage method. 
E)the cost allocation base is well understood.

Use the Information Below to Answer the Following Question(s)