3365 FINAL EXAM [CH. 16]

37) Which of the following is true of the physical-measure approach of allocating joint costs? A) Costs cannot be allocated if the measurement basis for each product are different. B) Physical measures usually result in less costs being allocated to the product that weighs the most. C) The physical measure reflects a product's ability to generate revenues. D) Obtaining comparable physical measures for all products is always straightforward.

A

4) The sales value at splitoff method ________. A) allocates joint costs to joint products on the basis of the relative total sales value at the splitoff point B) allocates joint costs to joint products on the basis of a comparable physical measure at the splitoff point C) allocates joint costs to joint products on the basis of relative NRV D) allocates joint costs to joint products in a way that each product has an identical gross-margin

A

5) Which of the following statements is true of joint costing? A) The costs of a production process that yields multiple products simultaneously are called joint costs. B) Distribution costs incurred beyond the splitoff point that are assignable to each of the specific products identified at the splitoff point are considered as joint costs. C) The primary purpose of joint costing is to allocate the separable costs to the individual products that are eventually sold. D) Joint costing is less useful for companies which manufacture multiple products simultaneously from the same production process.

A

19) A reason why a physical-measure to allocate joint costs is less preferred than the sales value at splitoff is because ________. A) a physical measure such as volume is difficult to estimate than sales value B) physical volume usually has little relationship to the revenue producing power of products C) a physical measure usually results in less costs being allocated to the product that weighs the most D) customers will easily understand that the products are overpriced

B

2) When the selling prices of all products at the splitoff point are unavailable, the ________ is the best alternative for allocating joint costs. A) sales value at splitoff method B) NRV method C) physical measures method D) constant gross-margin percentage method

B

3) Which of the following statements is true of joint production process and its components? A) Distribution costs incurred beyond the splitoff point assignable to each of the specific products identified at the splitoff point are considered as joint costs. B) Decisions relating to the sale or further processing of each identifiable product can be made independently of decisions about the other products beyond the splitoff point. C) When a joint production process yields two or more products with low total sales values relative to the total sales values of other products, those products are called joint products. D) The primary purpose of joint costing is to allocate the separable costs to the individual products that are eventually sold.

B

41) Which of the following statements is true of Kenton's joint cost allocations? A) The gross margin is same for both products because constant gross margin percentage NRV method ignores profits earned before the splitoff point. B) One product can receive negative joint costs allocations to bring the other unprofitable product to the overall average gross margin. C) Kenton has chosen the easiest method for allocating its joint costs of production. D) The gross profit percent of condensed milk is lower than the gross profit of butter cream.

B

6) The physical-measure method ________. A) allocates joint costs to joint products in a way that each product has an identical gross-margin percentage B) allocates joint costs to joint products on the basis of a comparable physical measure at the splitoff point C) allocates joint costs to joint products on the basis of the relative sales value at the splitoff point D) allocates joint costs to joint products on the basis of relative NRV

B

7) Which of the following statements is true of the production method of accounting for byproducts? A) It makes no journal entries until the byproduct is sold. B) It is the preferred method because of the matching principle. C) It records revenues of the byproduct in the income statement as revenue. D) It adds revenues of the byproduct to the cost of goods sold in the income statement.

B

12) Which of the following statements is true of main products and byproducts? A) A byproduct will never become a main product. B) A main product will never become a byproduct. C) Product classifications may change over time. D) Product classifications remains constant over time.

C

2) Which of the following statements best define splitoff point in joint costing? A) It is the point at which managers decide to discontinue one or more of the products. B) It is the point at which the managers decide to outsource some of its production processes. C) It is the juncture in a joint production process when two or more products become separately identifiable. D) It is the juncture at which decisions determining joint costs of various products to be produced are taken.

C

23) Which of the following statements about Alfarm's joint production costs is true? A) The gross-margin percentage per gallon of Cream and Liquid skim are equal because joint costs are allocated based on the number of gallons. B) The gross-margin percentage per gallon of Cream is higher than gross margin percentage per gallon of Liquid skim because of Cream's higher production volume. C) The joint production cost per gallon of Cream and Liquid skim are equal because joint costs are allocated based on the number of gallons. D) The joint production cost per gallon of Cream is higher than joint production cost per gallon of Liquid skim because of Cream's higher production volume.

C

3) Which of the following statements is true of the methods for allocating joint costs? A) The sales value at splitoff method lacks a common basis for allocating joint costs to products. B) The complexity of the sales value at splitoff method increases when managers make frequent changes to the sequence of post-splitoff processing decisions. C) The NRV method assumes that none of the markup is attributable to the separable costs. D) The NRV method treats the joint products as though they comprise a single product.

C

4) 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

C

42) Which of the methods of allocating joint costs usually is considered the simplest to implement? A) estimated net realizable value B) constant gross-margin percentage NRV C) sales value at splitoff D) physical measures

C

5) Which of the following statements is true of the methods for allocating joint costs? A) The net realizable value method uses the sales value of the units sold during the accounting period to allocate joint costs. B) The sales value at splitoff method always results in the same gross-margin percentage for all products. C) The sales value at splitoff method allocates joint costs to each product in proportion to the sales value of total production. D) The net realizable value method results in the same joint production cost per unit for all products.

C

8) Which of the following statements is true of the sales method of accounting for byproducts? A) It makes journal entries when the byproducts are produced. B) It is the preferred method because of the matching principle. C) It allows a firm to manage its reported earnings by timing the sale of byproducts. D) This method recognizes the byproduct inventory in the accounting period in which it is produced.

C

1) When a product is the result of a joint process, the decision to process the product past the splitoff point further should be influenced by the ________. A) total amount of the joint costs B) portion of the joint costs allocated to the individual products C) extra revenue earned past the splitoff point D) extra operating income earned past the splitoff point

D

1) In joint costing, the sales value at splitoff method is used frequently ________. A) in a dynamic business environment where the selling prices change frequently B) in anticipation of subsequent management decisions C) when selling prices are dependent on further processing decisions D) since the selling-price data exists at the splitoff

D

1) Which of the following statements is true of the methods for allocating joint costs? A) Constant gross-margin percentage method results in same joint production cost per unit for all products. B) Estimated net realizable value method results in same gross margin percentage for all products. C) Present value allocation method is the least preferred method due to its complex calculations. D) Sales value at splitoff method uses the sales value of the entire production of the accounting period to allocate costs.

D

3) Which of the following statements is true of sell-or-process-further decisions in joint costing? A) Joint costs incurred before the splitoff point are relevant in deciding whether to process the product further. B) All separable costs in joint-cost allocations are incremental costs. C) Separable costs incurred before the splitoff point are irrelevant in deciding whether to process the product further. D) Costs that differ between the alternatives of selling products or processing further are relevant.

D

43) Which of the following statements is true of the methods for allocating joint costs? A) Under the cause-and-effect criterion, the physical-measure method is highly desirable. B) Byproducts are never excluded from the denominator used in the physical-measure method. C) The NRV method is never used when the selling prices of joint products vary frequently. D) The sales value at splitoff method follows the benefits-received criterion of cost allocation.

D

47) Which of the following statements is true of Brital? A) The gross profit percent of condensed milk is lower than the gross profit of butter cream. B) The gross margin is same for both products because constant gross margin percentage NRV method ignores profits earned before the splitoff point. C) The gross profit of condensed milk is lower than the gross profit of butter cream. D) The gross margin is allocated to the joint products in order to determine the joint-cost allocations.

D

8) Which of the following statements is true in regard to the cause-and-effect relationship between allocated joint costs and individual products? A) A high individual product value results in a high level of joint costs. B) A low individual product value results in a low level of joint costs. C) A high individual product value results in a low level of joint costs. D) There is no cause-and-effect relationship.

D