Joint costing

1) 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

2) 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

   

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

• A) main products

• B) joint products

• C) byproducts

• D) scrap

4) Which of the following methods of allocating costs use market-based data?

• A) Sales value at splitoff method

• B) Estimated net realizable value method

• C) The constant gross-margin percentage method

• D) All of these answers are correct.

5) Athens Company processes 15,000 gallons of direct materials to produce two products, Product X and Product Y. Product X sells for $8 per gallon and Product Y, the main product, sells for $100 per gallon. The following information is for August:

 

                                                                   Beginning            Ending

                 Production               Sales       Inventory       Inventory

Product X:          4,375               4,000                      0                  375

Product Y:        10,000               9,625                  125                  500

 

The manufacturing costs totaled $30,000.

 What is the byproduct's net revenue reduction if byproducts are recognized in the general ledger during production and their revenues are a reduction of cost?

• A) $0

• B) $3,000

• C) $32,000

• D) $35,000

6) Athens Company processes 15,000 gallons of direct materials to produce two products, Product X and Product Y. Product X sells for $8 per gallon and Product Y, the main product, sells for $100 per gallon. The following information is for August:

 

                                                                   Beginning            Ending

                 Production               Sales       Inventory       Inventory

Product X:          4,375               4,000                      0                  375

Product Y:        10,000               9,625                  125                  500

 

The manufacturing costs totaled $30,000.

How much is the ending inventory reduction for the byproduct if byproducts are recognized in the general ledger at the point of sale?

• A) $0

• B) $563

• C) $1,500

• D) $17,500

7) Athens Company processes 15,000 gallons of direct materials to produce two products, Product X and Product Y. Product X sells for $8 per gallon and Product Y, the main product, sells for $100 per gallon. The following information is for August:

 

                                                                   Beginning            Ending

                 Production               Sales       Inventory       Inventory

Product X:          4,375               4,000                      0                  375

Product Y:        10,000               9,625                  125                  500

 

The manufacturing costs totaled $30,000.

A negative consequence of recording byproducts in the accounting records when the sale occurs is that:

• A) the revenue from the byproducts is usually fairly large, and the accounting records will be distorted

• B) managers can time earnings by their decision when to sell byproducts

• C) managers have an incentive to stockpile byproducts

• D) Both B and C are correct.

8) Company ABC has joint cost in production department equal 5,000 baht. At separation point, the main produce and by product are occurred. In terms of by product, the company can sell or continue to product. The market price at separation point is 400 baht. If the company continue to product, there are 2 costs occurred that are S&A = 60 baht and cost of production = 500 baht. After continuing production, the company can sell at 1,000 baht per units. So, we shouldn't continue to product.

• True

• False

9) A reason why a physical-measure to allocate joint costs is less preferred than the sales value at splitoff is:

• A) a physical measure such as volume is difficult to estimate because of shrinkage

• B) physical volume usually has little relationship to the revenue producing power of products

• C) a physical measure usually results in the costs being allocated to the product that weighs the most

• D) All of these answers are correct.

10) The Arvid Corporation manufactures widgets, gizmos, and turnbols from a joint process. May production is 2,000 widgets; 3,500 gizmos; and 4,000 turnbols. Respective per unit selling prices at splitoff are $30, $20, and $10. Joint costs up to the splitoff point are $75,000. 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) $26,471

• C) $17,647

• D) $28,125