Multiple Choice
Identify the
choice that best completes the statement or answers the question.
|
|
|
1.
|
Superior Company manufactures products A and B from a joint process which also
yields a by-product, X. Superior accounts for the revenues from its by-product sales as a
deduction from the cost of goods sold of its main products. | | Products | | | | | A | | B | | X | | Total | | Units produced | 15,000 | | 9,000 | | 6,000 | | 30,000 | | Joint costs | ? | | ? | | ? | | $264,000 | | Sales
value at split-off | $290,000 | | $150,000 | | $10,000 | | $450,000 | | | | | | | | |
Assuming that joint product costs are
allocated using the relative-sales-value at split-off approach, what was the joint cost allocated to
product B?
a. | $90,000 | b. | $79,200 | c. | $99,000 | d. | $88,000 |
|
|
|
2.
|
Stowe, Inc., produces two joint products, PEL and VEL. The joint
production costs for March 1991 were $15,000. During March 1991 further processing costs beyond
the split-off point, needed to convert the products into salable form, were $8,000 and $12,000 for
800 units of PEL and 400 units of VEL, respectively. PEL sells for $25 per unit and VEL sells for $50
per unit. Assuming that Stowe uses the net realizable value method for allocating joint product
costs, what were the joint costs allocated to product PEL for March 1991?
a. | $ 5,000 | b. | $ 6,000 | c. | $
9,000 | d. | $10,000 |
|
|
|
Grafton Company produces joint products A and B in
depratment One from a process which also yields by-product W. Product A and by-product W are
sold after separation, but product B must be further processed in department Two before it can be
sold. The cost assigned assigned to the by-product is its market value less $0.40 per pound for
delivery expense (net realizable value method). Information relating to a batch produced in
July 1983 is as follows:
| Product | | Production in pounds | | Sales price per pound | | A | | 2,000 | | $4.50 | B | | 4,000 | | 9.-00 | W | | 500 | | 1.50 | | | | | |
| Joint cost in department One | $18,000 | Product B additional process cost in department Two | $10,000 | | |
|
|
|
3.
|
Refer to Grafton: For joint cost allocation purposes, what is the net realizable
value at the split-off point of product B?
a. | $26,000 | b. | $46,000 | c. | $45,000 | d. | $36,000 |
|
|
|
4.
|
Lite Co. manufactures products X and Y from a joint process that also yields a
by-product, Z. Revenue from sales of Z is treated as a reduction of joint costs.
Additional information is as follows: | | Products | | | | | X | | Y | | Z | | Total | | Units
produced | 20,000 | | 20,000 | | 10,000 | | 50,000 | | Joint costs | ? | | ? | | ? | | $262,000 | | Sales value at split-off | $300,000 | | $150,000 | | $10,000 | | $460,000 | | | | | | | | |
Joint costs were allocated using the
sales value at split-off approach. The joint costs allocated to product X were
a. | $ 75,000 | b. | $100,800 | c. | $168,000 | d. | $150,000 |
|
|
|
5.
|
For purposes of allocating joint costs to joint products, the sales price at
point of sale, reduced by cost to complete after split-off, is assumed to be equal to the
a. | Net sales value at split-off. | b. | Joint costs. | c. | Total
costs. | d. | Sales price less a normal profit margin at point of
sale. |
|