Chapter 16
The sales value at splitoff method: A. allocates joint costs to joint products on the basis of the relative total sales value at the sliptoff 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 products in a way that each product has an identical gross-margin %
A. allocates joint costs to joint products on the basis of the relative total sales value at the sliptoff point
The ________ point is the juncture process when 2 or more products become separately indentifiable A. splitoff B. joint product C. process D. end
A. splitoff
Which of the following is a reason to allocate joint costs? A. rate regulation requirements, if applicable B. COGS computations C. insurance settlement cost info requirements D. ALL
D. ALL
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 % method D. ALL
D. ALL
Outputs with a negative sales value are: A. added to COGS B. added to joint production costs & allocated to joint or main products C. added to joint production & allocated to byproducts & scrap D. subtracted from product revenue
B. added to joint production costs & allocated to joint or main products
The physical-measure method: A. allocates joint costs to joint products in a way that each product has an identical gross-margin % 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. allocates joint costs to joint products on the basis of a comparable physical measure at the splitoff point
The constant gross-margin % NRV method of joint cost allocation: A. involves allocating costs in such a way that maintaining the same gross margin % for each product that was obtained in prior year B. involves allocating costs in such a way that the overall gross margin % is identical for the individual products C. is the same as the estimated NRV method D. is the same as the sales-value at splitoff method
B. involves allocating costs in such a way that the overall gross margin % is identical for the individual products
What type of cost is the result of an event that results in more than 1 product or service simultaneously? A. byproduct cost B. joint cost C. main cost D. separable cost
B. joint cost
When a joint production process yields 2 or more products with high total sales values, these products are called: A. main products B. joint products C. byproducts D. scrap
B. joint products
All of the following changes may indicate a change in product classification of a manuf process which had a splitoff point EXCEPT: A. byproduct increases in sales value due to a new application B. main product becomes a joint product C.main product becomes technologically obsolete D. byproduct loses its market due to a new invention
B. main product becomes a joint product
Which statement is NOT true regarding the sales method of accounting for byproducts: A. the method makes no journal entries until the byproduct is sold B. this method is the preferred method because of the matching principle C. revenues of the byproduct can be recorded in the income statement as revenue D. revenues of the byproduct can be recorded as a reduction of COGS in the income statement
B. this method is the preferred method because of the matching principle
What is the reason that accountants do NOT like to carry inventory at net realizable value? A. NRV is the most difficult costing method B. NRV recognizes income after the sale is complete C. NRV recognizes income before sales are made D. NRV is acceptable to the taxing authorities
C. NRV recognizes income before sales are made
Why do accountants criticize the practice of carrying inventories at estimated net realizable values? A. The costs of producing the products are usually estimates B. There is usually no clearly defined realizable value for these inventories C. The effect of this practice is to recognize income before sales are made D. ALL
C. The effect of this practice is to recognize income before sales are made
Which of the following statements is true regarding main products & byproducts? A. Product classification do not change over the short run B. _________________________________________________________________ long run C. ______________________________ may change over time D. The cause-n-effect criterion determines in the classification
C. ______________________________ may change over time
Byproducts and main products are differentiated by the A. number of units per processing period B. weight or volume of outputs per period C. amount of total sales value D. NONE
C. amount of total sales value
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 f production
C. at the splitoff point
When a single manuf process yields 2 products, 1 of which has a relatively high sales value compared to the other, the 2 products are respectively known as: A. joint products & byproducts B. ____________________ & scrap C. main products & byproducts D. ____________________ & joint products
C. main products & byproducts
Which cost allocation method should NOT be used to eliminate the conflict between decision making & performance evaluation? A. sales value at splitoff B. NRV C. physical measures D. constant gross-margin % NRV
C. physical measures
Which of the following is NOT a market-based approach to allocating costs? A. sales value at splitoff B. constant gross-margin % NRV C. physical measures D. net realizable value
C. physical measures
Which method of allocating costs would be used if the SP of all products at the splitoff point are UNAVAILABLE? A. sales value at splitoff method B. NRV method C. physical measures method D. constant gross-margin % method
C. physical measures method
All of the following methods may be used to allocate joint costs EXCEPT the: A. constant gross-margin % method B. estimated net realizable value method C. present value allocation method D. sales value at splitoff method
C. present value allocation method
Which method of accounting recognizes byproducts in the financial statements at the time their production is completed? A. production allocation method B. sale method C. production method D. NONE
C. production method
The benefits-received criteria for allocating joint costs indicate market-based measures are preferred because: A. physical measures such as volume are a clearer basis for allocating cost than other measures B. other measures are more difficult to calculate C. revenues are usually the best indicator of the benefits received D. NONE
C. revenues are usually the best indicator of the benefits received
Which of the following methods of allocating joint costs usually is considered the simplest to implement? A. estimated net realizable value B. constant gross-margin % NRV C. sales value at splitoff D. ALL
C. sales value at splitoff
What factor most often drives joint cost allocation? A. performance evaluation B. manager compensation C. selling prices D. simplicity of the method
C. selling prices
Which of the following is a DISADVANTAGE of the physical-measure method of allocating joint costs? A. the measurement basis for each product may be different B. The need for a common denominator C. The physical measure may not reflect the product's ability to generate revenues D. ALL
D. ALL
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
D. ALL
If managers make decisions to sell or process further using an incremental revenue / incremental cost approach, which method will show each product budgeted to have a positive (or 0) operating income on the resulting budgeted product-lie income statement? A. sales value at splitoff B. estimated NRV C. constant gross-margin % NRV D. ALL
D. ALL
Which of the following is NOT a reason to use the sales value at splitoff method: A. simplicity B. no anticipation of subsequent management decisions C. measurement of the value of the joint products at the sliptoff point D. All o the above are reasons to use the sales value at splitoff method
D. All o the above are reasons to use the sales value at splitoff method
A business which enters into a contract to purchase a product (or products) and will compensate the manuf under a cost reimbursement formula, should take an active part in the determination of how joint costs are allocated because: A. the manuf will attempt to allocate as large a portion of its costs to these products B. if the manuf successfully allocates a large portion of its costs to these products then it will be able to sell its other nonreimbursed products at a lower prices C. the FASB requires the business to participate in the cost allocation process D. Both A & B are correct
D. Both A & B are correct
An example of a market-based approach to allocating joint costs are allocating joint costs based on: A. sales value at splitoff method B. physical volume C. constant gross-margin % method D. Both A & C are correct
D. Both A & C are correct
Industries that recognize income on each product when production is completed include: A. mining B. toy manufacturers C. canning D. Both A & C are correct
D. Both A & C are correct
Proper costs allocation for inventory costing & cost-of-good-sold computations are important because: A. inventory costing is essential for proper balance sheet presentation B. most states have laws requiring proper balance sheet presentation & recommended allocation methods C.COGS is an important component in the determination of net income D. Both A & C are correct
D. Both A & C are correct
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, & 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 & C are correct
D. Both B & C are correct
In joint costing: A. costs are assigned to individual products as assembly of the product occurs B. costs are assigned to individual products as disassembly of the product occurs C. a single production process yields 2 or more products D. Both B & C are correct
D. Both B & C are correct
Outputs with 0 sales value are accounted for by: A. listing these various outputs in a footnote to the financial statements B. including the items as a relatively small portion of the value assigned to the products produced during the acct period C. making journal entries to reflect an estimate of possible values D. NONE
D. NONE
Which of the following statements is true in regard to the cause-n-effect relationship between allocated joint & 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-n-effect relationship
D. There is no cause-n-effect relationship
The net realizable value method: A. allocates joint costs to joint products in a way that each product has an identical gross-margin % 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
D. allocates joint costs to joint products on the basis of relative NRV
Products with a relatively sales value are known as: A. scrap B. main products C. joint products D. byproducts
D. byproducts
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. extra operating income earned past the splitoff point
All costs incurred beyond the splitoff point that are assignable to 1 or more individual products are called: A. byproduct cost B. joint cost C. main cost D. separable cost
D. separable cost
Which of the following is NOT a primary reason for allocating joint costs? A. cost justification & insurance settlement cost info requirements B. cost justification & asset measurements C. income measurement & rate regulation requirements D. to calculate the bonus of the chief executive officer
D. to calculate the bonus of the chief executive officer