Chapter 16 Cost Accounting
28) What is the estimated net realizable value of the skim goat ice cream at the split-off point? A) $453,600 B) $476,000 C) $672,000 D) $680,000
A
10) How does the sales value at split-off method allocate joint costs? A) allocates joint costs to joint products on the basis of the relative total sales value at the split-off point B) allocates joint costs to joint products on the basis of a comparable physical measure at the split-off 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 percentage
A
18) The Berkel Corporation manufactures Widgets, Gizmos, and Turnbols from a joint process. June production is 10,000 widgets; 13,500 gizmos; and 15,000 turnbols. Respective per unit selling prices at split-off are $95, $60, and $20. Joint costs up to the split-off point are $187,500. What amount of joint costs will be allocated to the Turnbols? (Do not round any intermediary calculations.) A) $27,306 B) $17,066 C) $73,726 D) $86,468
A
21) 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
Bismite Corporation purchases trees from Cheney lumber and processes them up to the split-off point where two products (paper and pencil casings) are obtained. The products are then sold to an independent company that markets and distributes them to retail outlets. The following information was collected for the month of October: Trees processed: 310 trees Production: paper 180,000 sheets pencil casings 180,000 Sales: paper 170,000 at $0.20 per page pencil casings 177,500 at $0.24 per casing The cost of purchasing 310 trees and processing them up to the split-off point to yield 180,000 sheets of paper and 180,000 pencil casings is $12,500. Bismite's accounting department reported no beginning inventory. 14) If the sales value at split-off method is used, what are the approximate joint costs assigned to ending inventory for paper? (Round intermediary percentages to the nearest hundredth.) A) $315.31 B) $29.61 C) $497.34 D) $379.24
A
The Alfarm Corporation processes raw milk up to the split-off point where two products, cream and liquid skim, are produced and sold. There was no beginning inventory. The following material was collected for the month of February: Direct materials processed: 780,000 gallons (758,500 gallons of good product) Production: Cream 443,500 gallons Liquid skim 315,000 gallons Sales: Cream 425,500 at $110 per gallon Liquid skim 305,000 at $95 per gallon The cost of purchasing 780,000 gallons of direct materials and processing it up to the split-off point to yield a total of 758,500 gallons of good product was $2,310,000. 24) When using a physical-volume measure, what is the approximate amount of joint costs that will be allocated to cream and liquid skim? (Round intermediary percentages to the nearest hundredth.) A) $1,350,657 and $959,343 B) $1,155,000 and $1,155,000 C) $1,345,524 and $964,476 D) $1,313,442 and $996,558
A
16.1 Objective 16.1 1) What is the name of a cost of production process that yields multiple products simultaneously? A) byproduct B) joint C) main D) separable
B
17) The Berkel Corporation manufactures Widgets, Gizmos, and Turnbols from a joint process. June production is 7000 widgets; 10,500 gizmos; and 12,500 turnbols. Respective per unit selling prices at split-off are $80, $55, and $30. Joint costs up to the split-off point are $188,500. If joint costs are allocated based upon the sales value at split-off, what amount of joint costs will be allocated to the widgets? (Do not round any intermediary calculations.) A) $23,492 B) $69,792 C) $46,736 D) $71,973
B
20) Which of the following reasons explain why a physical-measure to allocate joint costs is less preferred than the sales value at split-off point? 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
29) Using estimated net realizable value, what amount of the joint costs would be allocated Xyla and the skim goat ice cream? (Round intermediary percentage calculations to the nearest hundredth.) A) $675,000 and $286,000 B) $111,326 and $80,154 C) $93,240 and $93,240 D) $86,448 and $100,032
B
3) Which of the following statements is true of joint production process and its components? A) Distribution costs incurred beyond the split-off point assignable to each of the specific products identified at the split-off 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 split-off 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
8) An example of allocating joint costs using physical measures is allocating joint costs based on the ________. A) sales value at split-off point B) volume of the products produced C) constant gross-margin percentage D) net realizable value
B
Bismite Corporation purchases trees from Cheney lumber and processes them up to the split-off point where two products (paper and pencil casings) are obtained. The products are then sold to an independent company that markets and distributes them to retail outlets. The following information was collected for the month of October: Trees processed: 310 trees Production: paper 180,000 sheets pencil casings 180,000 Sales: paper 170,000 at $0.20 per page pencil casings 177,500 at $0.24 per casing The cost of purchasing 310 trees and processing them up to the split-off point to yield 180,000 sheets of paper and 180,000 pencil casings is $12,500. Bismite's accounting department reported no beginning inventory. 13) What is the total sales value at the split-off point of the pencil casings? A) $15,000 B) $43,200 C) $20,860 D) $13,700
B
LO #4 30) When the selling prices of all products at the split-off point are unavailable, the ________ is the best alternative for allocating joint costs. A) sales value at split-off method B) NRV method C) physical measures method D) constant gross-margin percentage method
B
11) 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 split-off method always results in the same gross-margin percentage for all products. C) The sales value at split-off 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
16) Bismite Corporation purchases trees from Cheney lumber and processes them up to the split-off point where two products (paper and pencil casings) emerge. The products are then sold to an independent company that markets and distributes them to retail outlets. The following information was collected for the month of October: Trees processed: 350 trees Production: paper 150,000 sheets pencil casings 150,000 Sales: paper 144,000 at $0.10 per page pencil casings 147,000 at $0.15 per casing The cost of purchasing 350 trees and processing them up to the split-off point to yield 150,000 sheets of paper and 150,000 pencil casings is $15,500. Bismite's accounting department reported no beginning inventory. If the sales value at split-off method is used, what is the approximate production cost for each paper sheet? (Round intermediary percentages to the nearest hundredth.) A) $0.043 B) $0.065 C) $0.041 D) $0.062
C
19) The Berkel Corporation manufactures Widgets, Gizmos, and Turnbols from a joint process. June production is 9000 widgets; 12,500 gizmos; and 14,500 turnbols. Respective per unit selling prices at split-off are $75, $50, and $25. Joint costs up to the split-off point are $188,000. What amount of joint costs will be allocated to the Gizmos? (Do not round any intermediary calculations.) A) $40,992 B) $21,260 C) $70,677 D) $76,331
C
2) Which of the following statements best define split off 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
22) 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 split-off D) physical measures
C
25) When using the physical-volume method, what is Cream's approximate production cost per gallon? (Round intermediary percentages to the nearest hundredth.) A) $2.64 B) $3.09 C) $3.05 D) $3.33
C
26) 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
4) 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
C
5) A company produces three products from a joint production process:: A, B, and C. As a percentage of total sales value, A represents 50%, B 49.5%, and C .5%. Product C could be considered a ________. A) primary product B) main product C) byproduct D) waste product
C
Bismite Corporation purchases trees from Cheney lumber and processes them up to the split-off point where two products (paper and pencil casings) are obtained. The products are then sold to an independent company that markets and distributes them to retail outlets. The following information was collected for the month of October: Trees processed: 310 trees Production: paper 180,000 sheets pencil casings 180,000 Sales: paper 170,000 at $0.20 per page pencil casings 177,500 at $0.24 per casing The cost of purchasing 310 trees and processing them up to the split-off point to yield 180,000 sheets of paper and 180,000 pencil casings is $12,500. Bismite's accounting department reported no beginning inventory. 12) What is the total sales value at the split-off point for paper? A) $42,600 B) $34,000 C) $36,000 D) $43,200
C
The Green Company processes unprocessed goat milk up to the split-off point where two products, condensed goat milk and skim goat milk result. The following information was collected for the month of October: Direct Materials processed: 100,500 gallons (after shrinkage) Production: Condensed goat milk 42,500 gallons Skim goat milk 58,000 gallons Sales: Condensed goat milk $4.00 per gallon Skim goat milk $3.50 per gallon The costs of purchasing the of unprocessed goat milk and processing it up to the split-off point to yield a total of 100,500 gallons of saleable product was $191,480. There were no inventory balances of either product. Condensed goat milk may be processed further to yield 42,000 gallons (the remainder is shrinkage) of a medicinal milk product, Xyla, for an additional processing cost of $6 per usable gallon. Xyla can be sold for $21 per gallon. Skim goat milk can be processed further to yield 56,700 gallons of skim goat ice cream, for an additional processing cost per usable gallon of $6. The product can be sold for $14 per gallon. There are no beginning and ending inventory balances. 27) What is the estimated net realizable value of Xyla at the split-off point? A) $453,600 B) $464,000 C) $630,000 D) $637,500
C
15) Bismite Corporation purchases trees from Cheney lumber and processes them up to the split-off point where two products (paper and pencil casings) emerge from the process. The products are then sold to an independent company that markets and distributes them to retail outlets. The following information was collected for the month of October: Trees processed: 330 trees Production: paper 190,000 sheets pencil casings 190,000 Sales: paper 184,000 at $0.10 per page pencil casings 186,500 at $0.14 per casing The cost of purchasing 330 trees and processing them up to the split-off point to yield 190,000 sheets of paper and 190,000 pencil casings is $15,500. Bismite's accounting department reported no beginning inventory. If the sales value at split-off method is used, what is the approximate production cost for each pencil casing? (Round intermediary percentages to the nearest hundredth.) A) $0.035 B) $0.049 C) $0.034 D) $0.048
D
23) 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 split-off method follows the benefits-received criterion of cost allocation.
D
6) Timber logs are processed into standard lumber used in home construction and wood chips that will be sold to landscapers. How would these products be classified? A) primary products B) main products C) joint products D) a primary product and a byproduct
D
9) Which of the following is a is a market-based approach to allocating joint costs? A) sales units B) units of production C) physical measures D) net realizable value
D
Objective 16.3 7) 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 split-off method uses the sales value of the entire production of the accounting period to allocate costs.
D
Objective 16.5 31) When a product is the result of a joint process, the decision to process the product past the split-off point further should be influenced by which of the following measures? A) the product's proportion of the total costs B) the portion of the joint costs allocated to the individual products C) the extra revenue earned past the split-off point D) the incremental operating income earned past the split-off point
D