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 net realizable value method. Which of the following correctly orders the four product lines from greatest allocation to least allocation?
A) Full-body pillows, standard pillows, sofa cushions, floor cushions
B) Floor cushions, sofa cushions, standard pillows, full-body pillows
C) Full-body pillows, sofa cushions, standard pillows, floor cushions
D) Floor cushions, full-body pillows, standard pillows, sofa cushions

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 net realizable value method. Which of the following correctly orders the four product lines from greatest allocation to least allocation?
A) Full-body pillows, standard pillows, sofa cushions, floor cushions 
B) Floor cushions, sofa cushions, standard pillows, full-body pillows 
C) Full-body pillows, sofa cushions, standard pillows, floor cushions 
D) Floor cushions, full-body pillows, standard pillows, sofa cushions

Quizplus · Accepted Answer

The net realizable value method allocates joint costs based on the final sales value minus any additional processing costs. The order from greatest to least allocation is determined by the net realizable value of each product line.

Use the Following Information for the Next 8 Questions