Show CHAPTER 16: COST ALLOCATION: JOINT PRODUCTS AND BYPRODUCTS TRUE/FALSE 1.Joint costs are incurred beyond the splitoff point and are assignable to individual products. Answer:FalseDifficulty:2Objective:1 Joint costs are incurred prior to the splitoff. 2.Separable costs are assignable after the splitoff point. Answer:TrueDifficulty:2Objective:1 3.The focus of joint costing is assigning costs to individual products as assembly occurs. Answer:False Difficulty:2Objective:1 The focus is accumulating costs incurred on the joint products. 4.A byproduct has a minimal sales value. Answer:TrueDifficulty:2Objective:2 5 The sales value at splitoff method is an example of allocating costs based upon the benefits-received criterion. Answer:TrueDifficulty:2Objective:4 6.A major deficiency of the sales value at splitoff method is that this method does not allow management to obtain individual product costs and gross-margin information. Answer:FalseDifficulty:2Objective:4 The sales value at splitoff method enables the accountant to obtain individual product costs and gross margins. 7.An advantage of the physical-measure method is that obtaining physical measures for all products is an easy task. Answer:FalseDifficulty:2Objective:4 For some products such as gas, obtaining physical measures is difficult. 8.The general guideline for using the physical-measure method is to include only joint products or main products in the physical-measure weighting computations. Answer: TrueDifficulty:2Objective:4 Chapter 16 Page 1 Cost Accounting, 14e (Horngren/Datar/Rajan) Diff: 2 1 4) The ________ point is the juncture in a joint production process when two or more products become A) splitoff value compared to the
other, the two products are respectively known as: AACSB: Reflective thinking 2 8) Byproducts and main products are differentiated by the: D) byproduct loses its market due to a new invention D) byproducts 3 12) Which of the following statements is true regarding main products and byproducts? 13) Outputs with zero sales value are accounted for by: AACSB: Reflective thinking 17) Separable costs include manufacturing costs only. Explanation: Separable costs include manufacturing, marketing, distribution, and other costs. Answer: FALSE Objective: 1 23) The products of a joint production process that have low total sales values compared with the total 27) Define the terms main product, joint product, and byproduct. Give at least one example of each type 7 29) What are a joint cost and a splitoff point? 8 3) Proper costs allocation for inventory costing and cost-of-goods-sold computations are important 9 7) List three reasons why we allocate joint costs to individual products or services. Give an example of
10 Objective 16.3 11 5) The physical-measure method: Answer the following questions using the information below: paper 60,000 sheets Sales: paper 58,000 at $0.04 per page The cost of purchasing 100 trees and processing them up to the splitoff point to yield 60,000 sheets of 13 11) If the sales value at splitoff method is used, what are the approximate joint costs assigned to ending 14 13) Yakima Manufacturing purchases trees from Cheney Lumber and processes them up to the splitoff paper 70,000 sheets Sales: paper 68,000 at $0.04 per page The cost of purchasing 100 trees and processing them up to the splitoff point to yield 70,000 sheets of 15 14) The Arvid Corporation manufactures widgets, gizmos, and turnbols from a joint process. May Answer the following questions using the information below: Mr. DirtOut The cost of purchasing 250,000 gallons of direct materials and processing it up to the splitoff point to 17 19) When using the physical-volume method, what is Mr.
DirtOut's approximate production cost per U 10,000 gallons Sales: U 9,500 at $150 per gallon The cost of purchasing 20,000 gallons of direct materials and processing it up to the splitoff point to 18 Answer the following questions using the information below: condensed goat milk 52,200 gallons Sales: condensed goat milk $3.50 per gallon The costs of purchasing the 130,000 gallons of unprocessed goat milk and processing it up to the splitoff 19 22) What is the estimated net realizable value of the skim goat ice cream at the splitoff point? 20 24) Using the sales value at splitoff method, what is the gross-margin percentage for condensed goat $144,480 × .53 = $144,480 × .47 = $106,126 $94,094 $106,126/$182,700 = $94,094/$162,000 = Diff: 3 $144,480 × .53 = $144,480 × .47 = $106,126 $94,094 $106,126/$182,700 = $94,094/$162,000 = 21 Diff: 3 Diff: 3 X 5,000 gallons Sales: X 4,750 at $150 per gallon The cost of purchasing 10,000 gallons of direct materials and processing it up to the splitoff point to $712,500 * 5,000/(5,000 + 4,500) = 0.5263 × $975,000 = $513,142 23 29) Beverage Drink Company processes direct materials up to the splitoff point where two products, A A 1,500 liters Sales: A $15.00 per liter The cost of purchasing 2,500 liters of direct materials and processing it up to the splitoff point to yield a 24 30) Cola Drink Company processes direct materials up to the splitoff point where two products, A and A 1,500 liters Sales: A $15.00 per liter The cost of purchasing 2,500 liters of direct materials and processing it up to the splitoff point to yield a 25 32) Which of the methods of allocating joint costs usually is considered the simplest to implement? 26 36) The sales value at splitoff method is an example of allocating costs using physical measures. 27 41) The net realizable value (NRV) method allocates joint costs to joint products produced during the 28 46) A criticism of the practice of carrying inventories at estimated net realizable values is that this 29 51) For each of the following methods of allocating joint costs, give a positive or a negative aspect
of Product 6,000 Sales
Value 2,000 50,000 Units Separable Required: 30 Diff: 2 Product Units Final Sales Separable Required:
Product Final Sales Less Gross Total Less Diff: 2 31 Joint Costs Which method is the best for joint cost allocation?The splitoff method in cost accounting
Allocating joint costs using sales value at splitoff may be the most effective method for planning and budgeting for joint costs.
What are the joint cost allocation methods?The two major methods of allocating joint costs are (1) the net realizable value method and (2) the physical quantities method. Net Realizable Value Method. The net realizable value method allocates joint costs to products based on their net real- izable values at the split-off point.
What is the typical approach to allocating joint product costs to products?Two methods are commonly used to allocate these joint costs to the joint products: the physical quantities method and the sales value method.
What are the four common methods for allocating joint costs?The four acceptable joint cost allocation methods are given below:. Market or sales value method. ... . Quantitative or physical unit method. ... . Average unit cost method. ... . Weighted average method.. |