chapter 16 acct 320
If the additional revenues from *further* processing exceed the additional costs from *relevant* processing, profit will _______ from further processing.
increase
Joint costs need to be allocated to __________ products (for external reporting, tax, cost-reimbursement, etc.).
individual
3 methods that use the market-based data approach (for Joint Production Process): • S____-_____ at splitoff method - ___-_____ _____ method - Constant G____-______ Percentage NRV method
- Sales-value - Net-realizable value - Gross-margin
The *Constant-Gross Margin % NRV method* allocates joint costs to joint products in such a manner that each *individual* product has the same...
... gross-margin percentage
Joint costs are irrelevant in a sell-or-process-further decision because...
... joint costs are the same whether or not further processing occurs.
Joint costs are incurred prior to the...
... splitoff point
If the production process yields two or more products with high sales values, they are referred to as _____ products.
joint
Products G and H are joint products developed from the same process with each being processed further. Joint costs are incurred until splitoff, the separable costs are incurred in further refining each product. Sales values of G and H at splitoff are used to allocate joint costs. If the sales value of G at splitoff increases and all other costs and selling prices remain unchanged, joint costs allocated to: G H a. increases increases b. increases decreases c. decreases decreases d. decreases increases
Answer is B
Tom makes products Katran and Klare from a joint process. Katran has been allocated $7,500 of total joint costs of $30,000 for the 1,500 units produced. Katran can be sold at the splitoff point for $4 per unit, or it can be processed further with additional costs of $2,000 and sold for $7 per unit. If Katran is processed further and sold, the result would be a. a breakeven situation. b. an overall loss of $1,500. c. a gain of $2,500 from further processing. d. a gain of $1,000 from further processing.
Answer is C Katran @ splitoff value $4 x 1500 = $6,000 Process further $7 × 1500 = $10,500 less separable costs of $2,000 = $8,500 $8,500 - $6,000 = $2,500 gain from further processing
The outputs of a _____ production process yield products with positive sales value as well as outputs having no sales value. Only those outputs having _______ sales value or that enable the company to avoid ________ costs are referred to as products.
joint positive incurring
In processing of beef, the yield includes steaks, roasts, and hamburger in addition to cowhide and other products. This is an example of what?
Joint Costs
Which method makes the assumption that products will be processed beyond the split-off point?
Net-realizable value (NRV) method
In practice, the distinction between ____ products, _____ products, and _________ may be difficult to determine.
main products, joint products, and byproducts
A _________ is an output of a joint production process having a *low* sales value.
byproduct
Joint costs can be allocated using ______-_____ data (e.g. sales revenue) or by using ________ measures (weight, quantity, or volume).
market-based physical
The *Physical-measure method* allocates joint costs on the basis of a _________ physical measure such as ______/______ at the splitoff point.
comparable weight/volume
The *Constant-Gross Margin % NRV method* can result in ________ allocations of joint costs.
negative
A *Main product* is the one product having a ____ total sales value emerging from a joint _________ process
high production
The *NRV Method* allocates joint costs to joint products on the basis of _____ sales value minus _________ costs.
final separable
*Sales-value at Splitoff method:* Sales value of the amount ________ rather than actual sales is used because the costs were incurred in all units ___x2___, not just those ____.
produced sold
The *Sales-value at Splitoff method* allocates joint costs to joint products on the basis of ________ sales value at the splitoff point.
relative
The concept of ________ costs and revenues should be applied in the decision to *sell or process further*.
relevant
The *Physical-measure method* is considered *less desirable* due to the fact that physical measures usually have no relationship to the _______-__________ abilities of a product.
revenue-generating
The *NRV Method* is often used when ______ prices for products at split-off do not _____.
selling exist
The sales-value at split-off method is the preferred method when ______-_____ data *exist* at split off because: - It ________ the value of the product at the split-off point. This is seen as the best measure of ________ received as a ______ of joint processing. - It does NOT anticipate subsequent __________ decisions. This method does NOT require information about any processing occurring _____ the splitoff point. - There is a ______ basis to allocate joint costs to products. All products can be measured by ___________ revenues from the product. - It is a relatively ______ method compared to others.
selling-price - measures; benefits; result - management; after - common; anticipated -simple
The *splitoff point* is defined as the point in the production process at which two or more products become __________ ____________.
separately identifiable.
*Joint costs* are costs of a production process that yields multiple products ______________.
simultaneously
Separable costs are costs incurred beyond the ________ _____ and include m____________, m________, d___________, and other costs.
splitoff point manufacturing, marketing, distribution