Use the following information for the next 8 questions.
HGT Corporation produces four products from a common production process. Selected data from HGT's accounting system for the four products appears below: Joint costs for the accounting period totaled $5,000. Each product line has a different product manager, who is evaluated based on product line profitability. Therefore, each manager is motivated to reduce his / her total product line costs as much as possible. The managers have been given information about potential joint cost allocations using the following three methods: physical output, sales at split-off point, and net realizable value. The managers are comparing the joint cost allocations under each method so that they can give the accountant input about their preferred method(s).
-Assume HGT allocates joint costs using the physical output method. Which of the following correctly orders the four product lines from greatest allocation to least allocation?
A) Sofa cushions, standard pillows, floor cushions, full-body pillows
B) Full-body pillows, standard pillows, floor cushions, sofa cushions
C) Full-body pillows, standard pillows, sofa cushions, floor cushions
D) Floor cushions, sofa cushions, standard pillows, full-body pillows

Question

Use the following information for the next 8 questions.
HGT Corporation produces four products from a common production process. Selected data from HGT's accounting system for the four products appears below:  Joint costs for the accounting period totaled $5,000. Each product line has a different product manager, who is evaluated based on product line profitability. Therefore, each manager is motivated to reduce his / her total product line costs as much as possible. The managers have been given information about potential joint cost allocations using the following three methods: physical output, sales at split-off point, and net realizable value. The managers are comparing the joint cost allocations under each method so that they can give the accountant input about their preferred method(s).
-Assume HGT allocates joint costs using the physical output method. Which of the following correctly orders the four product lines from greatest allocation to least allocation?
A) Sofa cushions, standard pillows, floor cushions, full-body pillows 
B) Full-body pillows, standard pillows, floor cushions, sofa cushions 
C) Full-body pillows, standard pillows, sofa cushions, floor cushions 
D) Floor cushions, sofa cushions, standard pillows, full-body pillows

Quizplus · Accepted Answer

The physical output method allocates joint costs based on the quantity of output. The order from greatest to least allocation is determined by the quantity produced, with full-body pillows having the highest output, followed by standard pillows, sofa cushions, and floor cushions.

Use the Following Information for the Next 8 Questions