Chapter 11

A company has $300,000 of joint costs for product A and product B. Product A's net realizable value is $400,000, and Product B's net realizable value is $600,000. The amount of joint cost allocated to product B using the net realizable value method is $. ____________

180,000

($10,000) Reason: $200,000 - $150,000 - $60,000 = ($10,000)

A company can sell a product for $150,000 at the split-off point or process it further to make a new product that sells for $200,000. The joint costs incurred prior to the split-off point were $100,000, and the additional processing costs to produce the new product are $60,000. The difference in net income if the company decides to process further is Blank______. Multiple choice question. $90,000 ($10,000) $40,000 $140,000

$120,000 Reason: ($400,000/$800,000) × $240,000 = $120,000

A company currently sells $800,000 of unassembled furniture, Model A and Model B. The company is considering whether to sell Model B assembled. Given the following, what amount of joint costs should be allocated to assembled Model B? Sales value of unassembled Model B is $400,000, and the sales value of assembled Model B is $500,000. The additional costs to assemble Model B are $100,000, and joint costs are $240,000. Multiple choice question. $100,000 $144,000 $133,333 $120,000

are not relevant to the decision

A company is deciding whether or not to sell or process a product. The allocation method chosen to allocate joint costs incurred up to this point Blank______. Multiple choice question. are not relevant to the decision must be considered in making the decision make it unprofitable to sell the product without additional processing

60,000 Explanation:(10,000/50,000) x $300,000

A company produces two products: A and B. The relative market values at the split-off point are not available. For every $300,000 of joint costs, Product A produces 10,000 pounds, and Product B produces 40,000 pounds. The amount of joint costs allocated to Product A using the physical quantities method is $ _________.

240000

A company produces two products: A and B. The relative market values at the split-off point are not available. For every $300,000 of joint costs, Product A produces 10,000 pounds, and Product B produces 40,000 pounds. The amount of joint costs allocated to Product B using the physical quantities method is $ _________.

reflect the economic relationship between the by-products and the main products minimize recordkeeping for inventory valuation purposes

Accounting for by-products attempts to Blank______. Multiple select question. reflect the economic relationship between the by-products and the main products minimize recordkeeping for inventory valuation purposes always ensure that by-products are treated as a reduction of the cost of the main products

production department

An example of a final cost center would be a(n) Blank______. Multiple choice question. human resources department employee cafeteria information systems department production department

Final cost center

Any cost center whose costs are not allocated to another cost center is called a(n) ___________ cost center.

are never

In deciding whether to sell goods now or process them further, the costs incurred to get the goods to this point Blank______ relevant to the decision. Multiple choice question. may or may not be are always are never

net realizable value

Joint costs allocated based on the proportional values of the joint products at the split-off points is called the Blank______ method. Multiple choice question. step physical quantities gross realizable value net realizable value

Blank 1: net Blank 2: realizable Blank 3: value

Joint costs are allocated based on the proportional values of the joint products at the split-off point when using the ______ ______ ______ method.

net realizable value

Joint costs are allocated based on the proportional values of the joint products at the split-off point when using the method ______ ______ ___. (

Split-off point

Processing costs incurred prior to the ______ -________ _________are the joint costs.

$120,000 Reason: ($400,000/$1,000,000) × $300,000

Product A's net realizable value is $400,000, and Product B's net realizable value is $600,000. The company has $300,000 of joint costs for the two products. The amount to be allocated to Department A using the net realizable value method is Blank______. Multiple choice question. $100,000 $180,000 $120,000 $150,000

information systems human resources

Select all that apply Examples of service departments include Blank______. Multiple select question. information systems human resources production department

the inventory value of products costs for evaluating executive performance

Select all that apply Joint costs are allocated to determine Blank______. Multiple select question. the inventory value of products costs for evaluating executive performance whether or not to outsource a department

net realizable value physical quantities

Select all that apply Major methods for allocating joint costs are Blank______ method. Multiple select question. net realizable value gross realizable reciprocal physical quantities

violates the matching principle allows the accountant to avoid keeping an inventory of by-product processing costs

Select all that apply Some companies make by-product accounting as easy as possible by expensing the by-products' costs in the period in which they are incurred and recording the total revenue from them when they are sold. This accounting treatment Blank______. Multiple select question. still requires the net realizable value be calculated violates the matching principle allows the accountant to avoid keeping an inventory of by-product processing costs is required by GAAP

output product prices are highly volatile significant processing occurs between the split-off point and the first point of marketability

Select all that apply The physical quantities method is used when Blank______. Multiple select question. physical measures are not available for the products there is insignificant processing occurring between the split-off point and the first point of marketability output product prices are highly volatile significant processing occurs between the split-off point and the first point of marketability

additional cost of processing further additional revenue after processing further

Select all that apply When considering a sell-or-process-further decision, management must consider Blank______. Multiple select question. additional cost of processing further the joint costs for the intermediate stage additional revenue after processing further

No one allocation method is appropriate for all situations. Allocating joint costs is always somewhat arbitrary.

Select all that apply Which of the following are limitations of allocating joint costs? Multiple select question. No one allocation method is appropriate for all situations. Allocating joint costs is always somewhat arbitrary. Joint costs must be separated on a cause-and-effect basis Allocated joint costs cannot be used in decision-making.

It is impossible to separate joint costs attributable to products on a cause-and-effect basis. No one allocation method is appropriate for all situations.

Select all that apply Which of the following statements are correct? Multiple select question. It is impossible to separate joint costs attributable to products on a cause-and-effect basis. No one allocation method is appropriate for all situations. Because it is arbitrary, allocating joint costs is rarely done in practice.

Blank 1: joint

The cost of a manufacturing process with two or more outputs is called a(n) ________cost.

net realizable value is used when the joint products can be sold at the split-off point

The difference between "net realizable value" and "estimated net realizable value" is that Blank______. Multiple choice question. net realizable value is used when the joint products can be sold at the split-off point net realizable value is the sales price of a final product minus additional processing costs net realizable value is required when there is no market value available at the split-off point

netback, workback

The estimated net realizable value method is sometimes referred to as the ________ or ____________method.

physical quantities

The method that allocates joint costs based on measurement of the volume or weight of the joint products at the split-off point is the _______ _______method.

Blank 1: sales Blank 2: value

The net realizable value is also called the _______ ______ at split-off.

Blank 1: joint Blank 2: products

The outputs from a common input and common _production process are called _________________.

joint product

The outputs from a common input and common production process are called ________ _________ .

By-products

The outputs from joint production process that are relatively minor in quantity and/or value when compared to the main outputs are called _______-________.

Blank 1: split Blank 2: off Blank 3: point

The stage of processing at which the two products are separated is called the - .

Blank 1: realizable Blank 2: value Blank 3: physical Blank 4: quantities

The two major methods for allocating joint costs are the net__________ ________ method and the_______ _______ method.

gross margin

Using the net realizable value method, the ______ _______ as a percentage of sales is assumed to be equal for all products.

joint cost

When companies are subject to regulations, the allocation of __________ costs can be a significant factor in determining the regulated rates. (

estimated net realizable value

When no sales values exist for the outputs at the split-off point, the______ _____ -__ value should be determined by taking the sales value of each product at the first point at which it can be marketed.

the same for all products

When using the net realizable value method, it is assumed that the gross margin as a percentage of sales is Blank______. Multiple choice question. proportionate to the amount of sales for each product the same for all products equal to the contribution margin

the same for all products

When using the net realizable value method, it is assumed that the gross margin as a percentage of sales is Blank______. Multiple choice question. the same for all products equal to the contribution margin proportionate to the amount of sales for each product

Any cost center whose costs are charged to other departments in an organization is called a(n) _____ cost center.

intermediate cost center

Select all that apply Regarding service department allocations, user departments can be Blank______ departments. Multiple select question. marketing production other service other user

marketing production other service