Which one of the following statements is true

ACCOUNTING

Multiple Choice

Which one of the following statements is true?

a. In a job-costing system, individual jobs use different quantities of production resources.

b. In a process-costing system each unit uses approximately the same amount of resources.

c. An averaging process is used to calculate unit costs in a job-costing system.

d. Both (a) and (b) are true.

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Process costing should be used to assign costs to products when

ACCOUNTING

Multiple Choice

Process costing should be used to assign costs to products when

a. the units produced are similar.

b. the units produced are dissimilar.

c. the calculation of unit costs requires the averaging of unit costs over all units produced.

d. either (a) or (c) are present.

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Which of the following manufactured products would not use process costing

ACCOUNTING

Multiple Choice

Which of the following manufactured products would not use process costing?

a. 767 jet aircraft

b. 19-inch television sets

c. Custom built houses

d. (a) and (c) would not use process costing.

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Costing systems that are used for the costing of like or similar units of products in mass production are called

ACCOUNTING

Multiple Choice

Costing systems that are used for the costing of like or similar units of products in mass production are called

a. inventory-costing systems.

b. job-costing systems.

c. process-costing systems.

d. weighted-average costing systems.

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An operation-costing system uses work orders that specify needed direct materials and step-by-step operations

ACCOUNTING

True or False

An operation-costing system uses work orders that specify needed direct materials and step-by-step operations

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Hybrid costing systems are developed to cost products that are produced in a standardized environment, but are often customized to meet the needs of

ACCOUNTING

True or False

Hybrid costing systems are developed to cost products that are produced in a standardized environment, but are often customized to meet the needs of some of its customers

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Each department is regarded as a distinct accounting entity when interdepartmental transfers are present in an organization

ACCOUNTING

True or False

Each department is regarded as a distinct accounting entity when interdepartmental transfers are present in an organization

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Transferred-out costs are incurred in previous departments that are carried forward as the product's cost as it moves to a subsequent process in the

ACCOUNTING

True or False

Transferred-out costs are incurred in previous departments that are carried forward as the product's cost as it moves to a subsequent process in the production cycle

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Under standard costing the cost per equivalent-unit calculation is more difficult than in either weighted average or FIFO

ACCOUNTING

True or False

Under standard costing the cost per equivalent-unit calculation is more difficult than in either weighted average or FIFO

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Standard costing is extremely useful when unique, high cost products are produced, as compared to the production of multiple products

ACCOUNTING

True or False

Standard costing is extremely useful when unique, high cost products are produced, as compared to the production of multiple products

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A major advantage of the weighted-average process costing is that it provides managers with information about changes in the costs per unit from one

ACCOUNTING

True or False

A major advantage of the weighted-average process costing is that it provides managers with information about changes in the costs per unit from one period to the next

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Activity-based costing has more applicability in a process-costing system than in a job-costing environment

ACCOUNTING

True or False

Activity-based costing has more applicability in a process-costing system than in a job-costing environment

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Process costing FIFO is usually applied to both the units entering a department and the units leaving a department

ACCOUNTING

True or False

Process costing FIFO is usually applied to both the units entering a department and the units leaving a department

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The first-in, first-out process-costing method assumes that units in beginning inventory are completed during the current accounting period

ACCOUNTING

True or False

The first-in, first-out process-costing method assumes that units in beginning inventory are completed during the current accounting period

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The FIFO process costing method merges the work and the costs of the beginning inventory with the work and the costs done during the current period

ACCOUNTING

True or False

The FIFO process costing method merges the work and the costs of the beginning inventory with the work and the costs done during the current period

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In the weighted-average costing method, the costs of direct materials in beginning inventory are not included in the cost per unit calculation since

ACCOUNTING

True or False

In the weighted-average costing method, the costs of direct materials in beginning inventory are not included in the cost per unit calculation since direct materials are almost always added at the start of the production process

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Equivalent units in beginning work in process + equivalent units of work done in the current period equals equivalent units completed and transferred

ACCOUNTING

True or False

Equivalent units in beginning work in process + equivalent units of work done in the current period equals equivalent units completed and transferred out in the current period minus equivalent units in ending work in process

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The weighted-average process costing method does not distinguish between units started in the previous period but completed during the current period

ACCOUNTING

True or False

The weighted-average process costing method does not distinguish between units started in the previous period but completed during the current period and units started and completed during the current period

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The accounting (for a bakery) entry to record the transfer of rolls from the mixing department to the baking department is

ACCOUNTING

True or False

The accounting (for a bakery) entry to record the transfer of rolls from the mixing department to the baking department is:

Work in Process-Mixing Department

Work in Process-Baking Department

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Process-costing journal entries and job-costing journal entries are similar with respect to direct materials and conversion costs

ACCOUNTING

True or False

Process-costing journal entries and job-costing journal entries are similar with respect to direct materials and conversion costs

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Estimating the degree of completion for the calculation of equivalent units is usually easier for conversion costs than it is for direct materials

ACCOUNTING

True or False

Estimating the degree of completion for the calculation of equivalent units is usually easier for conversion costs than it is for direct materials

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Process-costing systems separate costs into cost categories according to the timing of when costs are introduced into the process

ACCOUNTING

True or False

Process-costing systems separate costs into cost categories according to the timing of when costs are introduced into the process

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The principal difference between process costing and job costing is that in job costing an averaging process is used to compute the unit costs of

ACCOUNTING

True or False

The principal difference between process costing and job costing is that in job costing an averaging process is used to compute the unit costs of products or services

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Examples of industries that would use process costing include the pharmaceutical and semiconductor industry

ACCOUNTING

True or False

Examples of industries that would use process costing include the pharmaceutical and semiconductor industry

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A negative consequence of recording byproducts in the accounting records when the sale occurs is

ACCOUNTING

Multiple Choice

A negative consequence of recording byproducts in the accounting records when the sale occurs is

a. the revenue from the byproducts is usually fairly large, and 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) and (c).

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How much is the ending inventory reduction for the byproduct if byproducts are recognized in the general ledger at the point of sale

ACCOUNTING

Multiple Choice

Sparta Company processes 15,000 gallons of direct materials to produce two products, Product X and Product Y. Product X sells for $4 per gallon and Product Y, the main product, sells for $50 per gallon. The following information is for August:

Beginning Ending

Production Sales Inventory Inventory

Product X: 4,375 4,000 0 375

Product Y: 10,000 9,625 125 500


The manufacturing costs totaled $15,000.

How much is the ending inventory reduction for the byproduct if byproducts are recognized in the general ledger at the point of sale?

a. $0

b. $563

c. $1,500

d. $17,500

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What is the byproduct's net revenue reduction if byproducts are recognized in the general ledger during production and their revenues are a reduction

ACCOUNTING

Multiple Choice

Sparta Company processes 15,000 gallons of direct materials to produce two products, Product X and Product Y. Product X sells for $4 per gallon and Product Y, the main product, sells for $50 per gallon. The following information is for August:

Beginning Ending

Production Sales Inventory Inventory

Product X: 4,375 4,000 0 375

Product Y: 10,000 9,625 125 500


The manufacturing costs totaled $15,000.

What is the byproduct's net revenue reduction if byproducts are recognized in the general ledger during production and their revenues are a reduction of cost?

a. $0

b. $1,500

c. $16,000

d. $17,500

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Which method of accounting recognizes byproducts in the financial statements at the time their production is completed

ACCOUNTING

Multiple Choice

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 of the above

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If managers make sell or process further decisions using an incremental revenue/incremental cost approach, which method will show each product

ACCOUNTING

Multiple Choice

If managers make sell or process further decisions using an incremental revenue/incremental cost approach, which method will show each product budgeted to have a positive (or zero) operating income on the resulting budgeted product-line income statement?

a. Sales value at splitoff

b. Estimated NRV

c. Constant gross-margin percentage NRV

d. All of the above methods

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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

ACCOUNTING

Multiple Choice

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

a. the total amount of the joint costs.

b. the portion of the joint costs allocated to the individual products.

c. the extra revenue earned past the splitoff point.

d. the extra operating income earned past the splitoff point.

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Why do accountants criticize the practice of carrying inventories at estimated net realizable values

ACCOUNTING

Multiple Choice

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 of the above are well-recognized criticisms of this practice.

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Industries that recognize income on each product when production is completed include

ACCOUNTING

Multiple Choice

Industries that recognize income on each product when production is completed include

a. mining.

b. toy manufacturers.

c. canning.

d. both (a) and (c).

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Which of the methods of allocating joint costs usually is considered the simplest to implement

ACCOUNTING

Multiple Choice

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 splitoff

d. All of the above can be the easiest to implement given the proper circumstances.

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Which of the following is a disadvantage of the physical-measure method of allocating joint costs

ACCOUNTING

Multiple Choice

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 of the above are disadvantages.

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Cola Drink Company processes direct materials up to the splitoff point where two products, A and B, are obtained

ACCOUNTING

Multiple Choice

Cola Drink Company processes direct materials up to the splitoff point where two products, A and B, are obtained. The following information was collected for the month of July:

Direct materials processed: 2,500 liters (with 20% shrinkage)


Production: A 1,500 liters

B 500 liters


Sales: A $15.00 per liter

B $10.00 per liter

Cost of purchasing 2,500 liters of direct materials and processing it up to the splitoff point to yield a total of 2,000 liters of good products was $4,500. There were no inventory balances of A and B.

Product A may be processed further to yield 1,375 liters of Product Z5 for an additional processing cost of $150. Product Z5 is sold for $25.00 per liter. There was no beginning inventory and ending inventory was 125 liters.

Product B may be processed further to yield 375 liters of Product W3 for an additional processing cost of $275. Product W3 is sold for $30.00 per liter. There was no beginning inventory and ending inventory was 25 liters.


What is Product Z5's estimated net realizable value at the splitoff point?

a. $11,100

b. $22,350

c. $34,225

d. $34,375

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Beverage Drink Company processes direct materials up to the splitoff point where two products, A and B, are obtained

ACCOUNTING

Multiple Choice

Beverage Drink Company processes direct materials up to the splitoff point where two products, A and B, are obtained. The following information was collected for the month of July:

Direct materials processed: 2,500 liters (with 20% shrinkage)


Production: A 1,500 liters

B 500 liters


Sales: A $15.00 per liter

B $10.00 per liter

Cost of purchasing 2,500 liters of direct materials and processing it up to the splitoff point to yield a total of 2,000 liters of good products was $4,500. There were no inventory balances of A and B.

Product A may be processed further to yield 1,375 liters of Product Z5 for an additional processing cost of $150. Product Z5 is sold for $25.00 per liter. There was no beginning inventory and ending inventory was 125 liters.

Product B may be processed further to yield 375 liters of Product W3 for an additional processing cost of $275. Product W3 is sold for $30.00 per liter. There was no beginning inventory and ending inventory was 25 liters.


If Product Z5 and Product W3 are produced, what are the expected sales values of production, respectively?

a. $11,250 and $34,375

b. $22,500 and $ 5,000

c. $31,250 and $10,500

d. $34,375 and $11,250

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Chem Manufacturing Company processes direct materials up to the splitoff point where two products (X and Y) are obtained and sold

ACCOUNTING

Multiple Choice

Chem Manufacturing Company processes direct materials up to the splitoff point where two products (X and Y) are obtained and sold. The following information was collected for the month of November.

Direct materials processed: 10,000 gallons (10,000 gallons yield 9,500 gallons of good product and 500 gallons of shrinkage)

Production: X 5,000 gallons

Y 4,500 gallons


Sales: X 4,750 at $150 per gallon

Y 4,000 at $100 per gallon


The cost of purchasing 10,000 gallons of direct materials and processing it up to the splitoff point to yield a total of 9,500 gallons of good products was $975,000.

The beginning inventories totaled 50 gallons for X and 25 gallons for Y. Ending inventory amounts reflected 300 gallons of Product X and 525 gallons of Product Y. October costs per unit were the same as November.

Using the physical-volume method, what is Product X's approximate gross-margin percentage?

a. 32%

b. 33%

c. 35%

d. 38%

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How much (if any) extra income would Morton earn if it produced and sold skim milk ice cream from goats rather than goat skim milk

ACCOUNTING

Multiple Choice

The Morton Company processes unprocessed goat milk up to the splitoff 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: 65,000 gallons (shrinkage was 10%)

Production: condensed goat milk 26,100 gallons

skim goat milk 32,400 gallons

Sales: condensed goat milk $3.50 per gallon

skim goat milk $2.50 per gallon

The costs of purchasing the 65,000 gallons of unprocessed goat milk and processing it up to the split off point to yield a total of 58,500 gallons of salable product was $72,240. There were no inventory balances of either product.

Condensed goat milk may be processed further to yield 19,500 gallons (the remainder is shrinkage) of a medicinal milk product, Xyla, for an additional processing cost of $3 per usable gallon. Xyla can be sold for $18 per gallon.

Skim goat milk can be processed further to yield 28,100 gallons of skim goat ice cream, for an additional processing cost per usable gallon of $2.50. The product can be sold for $9 per gallon.

There are no beginning and ending inventory balances.


How much (if any) extra income would Morton earn if it produced and sold skim milk ice cream from goats rather than goat skim milk? Allocate joint processing costs based upon the relative sales value at the splitoff point.

a. $47,047

b. $117,297

c. $101,650

d. $70,250

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How much (if any) extra income would Morton earn if it produced and sold all of the Xyla from the condensed goat milk

ACCOUNTING

Multiple Choice

The Morton Company processes unprocessed goat milk up to the splitoff 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: 65,000 gallons (shrinkage was 10%)

Production: condensed goat milk 26,100 gallons

skim goat milk 32,400 gallons

Sales: condensed goat milk $3.50 per gallon

skim goat milk $2.50 per gallon

The costs of purchasing the 65,000 gallons of unprocessed goat milk and processing it up to the split off point to yield a total of 58,500 gallons of salable product was $72,240. There were no inventory balances of either product.

Condensed goat milk may be processed further to yield 19,500 gallons (the remainder is shrinkage) of a medicinal milk product, Xyla, for an additional processing cost of $3 per usable gallon. Xyla can be sold for $18 per gallon.

Skim goat milk can be processed further to yield 28,100 gallons of skim goat ice cream, for an additional processing cost per usable gallon of $2.50. The product can be sold for $9 per gallon.

There are no beginning and ending inventory balances.


How much (if any) extra income would Morton earn if it produced and sold all of the Xyla from the condensed goat milk? Allocate joint processing costs based upon relative sales value on the splitoff. (Extra income means income in excess of what Morton would have earned from selling condensed goat milk.)

a. $53,063

b. $254,213

c. $201,150

d. $96,787

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Using the sales value at splitoff method, what is the gross-margin percentage for skim goat milk at the splitoff point

ACCOUNTING

Multiple Choice

The Morton Company processes unprocessed goat milk up to the splitoff 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: 65,000 gallons (shrinkage was 10%)

Production: condensed goat milk 26,100 gallons

skim goat milk 32,400 gallons

Sales: condensed goat milk $3.50 per gallon

skim goat milk $2.50 per gallon

The costs of purchasing the 65,000 gallons of unprocessed goat milk and processing it up to the split off point to yield a total of 58,500 gallons of salable product was $72,240. There were no inventory balances of either product.

Condensed goat milk may be processed further to yield 19,500 gallons (the remainder is shrinkage) of a medicinal milk product, Xyla, for an additional processing cost of $3 per usable gallon. Xyla can be sold for $18 per gallon.

Skim goat milk can be processed further to yield 28,100 gallons of skim goat ice cream, for an additional processing cost per usable gallon of $2.50. The product can be sold for $9 per gallon.

There are no beginning and ending inventory balances.


Using the sales value at splitoff method, what is the gross-margin percentage for skim goat milk at the splitoff point?

a. 21.1%

b. 55.1%

c. 58.1%

d. 38.2%

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Using the sales value at splitoff method, what is the gross-margin percentage for condensed goat milk at the splitoff point

ACCOUNTING

Multiple Choice

The Morton Company processes unprocessed goat milk up to the splitoff 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: 65,000 gallons (shrinkage was 10%)

Production: condensed goat milk 26,100 gallons

skim goat milk 32,400 gallons

Sales: condensed goat milk $3.50 per gallon

skim goat milk $2.50 per gallon

The costs of purchasing the 65,000 gallons of unprocessed goat milk and processing it up to the split off point to yield a total of 58,500 gallons of salable product was $72,240. There were no inventory balances of either product.

Condensed goat milk may be processed further to yield 19,500 gallons (the remainder is shrinkage) of a medicinal milk product, Xyla, for an additional processing cost of $3 per usable gallon. Xyla can be sold for $18 per gallon.

Skim goat milk can be processed further to yield 28,100 gallons of skim goat ice cream, for an additional processing cost per usable gallon of $2.50. The product can be sold for $9 per gallon.

There are no beginning and ending inventory balances.


Using the sales value at splitoff method, what is the gross-margin percentage for condensed goat milk at the splitoff point?

a. 21.1%

b. 55.1%

c. 58.1%

d. 38.2%

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Using estimated net realizable value, what amount of the $72,240 of joint costs would be allocated Xyla and the skim goat ice cream

ACCOUNTING

Multiple Choice

The Morton Company processes unprocessed goat milk up to the splitoff 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: 65,000 gallons (shrinkage was 10%)

Production: condensed goat milk 26,100 gallons

skim goat milk 32,400 gallons

Sales: condensed goat milk $3.50 per gallon

skim goat milk $2.50 per gallon

The costs of purchasing the 65,000 gallons of unprocessed goat milk and processing it up to the split off point to yield a total of 58,500 gallons of salable product was $72,240. There were no inventory balances of either product.

Condensed goat milk may be processed further to yield 19,500 gallons (the remainder is shrinkage) of a medicinal milk product, Xyla, for an additional processing cost of $3 per usable gallon. Xyla can be sold for $18 per gallon.

Skim goat milk can be processed further to yield 28,100 gallons of skim goat ice cream, for an additional processing cost per usable gallon of $2.50. The product can be sold for $9 per gallon.

There are no beginning and ending inventory balances.


Using estimated net realizable value, what amount of the $72,240 of joint costs would be allocated Xyla and the skim goat ice cream?

a. $41,971 and $30,269

b. $44,471 and $27,769

c. $32,796 and $39,444

d. $36,120 and $36,120

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What is the estimated net realizable value of the skim goat ice cream at the splitoff point

ACCOUNTING

Multiple Choice

The Morton Company processes unprocessed goat milk up to the splitoff 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: 65,000 gallons (shrinkage was 10%)

Production: condensed goat milk 26,100 gallons

skim goat milk 32,400 gallons

Sales: condensed goat milk $3.50 per gallon

skim goat milk $2.50 per gallon

The costs of purchasing the 65,000 gallons of unprocessed goat milk and processing it up to the split off point to yield a total of 58,500 gallons of salable product was $72,240. There were no inventory balances of either product.

Condensed goat milk may be processed further to yield 19,500 gallons (the remainder is shrinkage) of a medicinal milk product, Xyla, for an additional processing cost of $3 per usable gallon. Xyla can be sold for $18 per gallon.

Skim goat milk can be processed further to yield 28,100 gallons of skim goat ice cream, for an additional processing cost per usable gallon of $2.50. The product can be sold for $9 per gallon.

There are no beginning and ending inventory balances.


What is the estimated net realizable value of the skim goat ice cream at the splitoff point

a. $182,650

b. $252,900

c. $110,200

d. $85,450

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What is the estimated net realizable value of Xyla at the splitoff point

ACCOUNTING

Multiple Choice

The Morton Company processes unprocessed goat milk up to the splitoff 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: 65,000 gallons (shrinkage was 10%)

Production: condensed goat milk 26,100 gallons

skim goat milk 32,400 gallons

Sales: condensed goat milk $3.50 per gallon

skim goat milk $2.50 per gallon

The costs of purchasing the 65,000 gallons of unprocessed goat milk and processing it up to the split off point to yield a total of 58,500 gallons of salable product was $72,240. There were no inventory balances of either product.

Condensed goat milk may be processed further to yield 19,500 gallons (the remainder is shrinkage) of a medicinal milk product, Xyla, for an additional processing cost of $3 per usable gallon. Xyla can be sold for $18 per gallon.

Skim goat milk can be processed further to yield 28,100 gallons of skim goat ice cream, for an additional processing cost per usable gallon of $2.50. The product can be sold for $9 per gallon.

There are no beginning and ending inventory balances.


What is the estimated net realizable value of Xyla at the splitoff point?

a. $182,650

b. $252,900

c. $292,500

d. $351,000

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What are the physical-volume proportions for products U and V, respectively

ACCOUNTING

Multiple Choice

Argon Manufacturing Company processes direct materials up to the splitoff point where two products (U and V) are obtained and sold. The following information was collected for last quarter of the calendar year.

Direct materials processed: 10,000 gallons (10,000 gallons yield 9,500 gallons of good product and 500 gallons of shrinkage)

Production: U 5,000 gallons

V 4,500 gallons

Sales: U 4,750 at $150 per gallon

V 4,000 at $100 per gallon


The cost of purchasing 10,000 gallons of direct materials and processing it up to the splitoff point to yield a total of 9,500 gallons of good products was $975,000.

Beginning inventories totaled 50 gallons for U and 25 gallons for V. Ending inventory amounts reflected 300 gallons of Product U and 525 gallons of Product V. October costs per unit were the same as November.

What are the physical-volume proportions for products U and V, respectively?

a. 47.37% and 53.63%

b. 55.00% and 45.00%

c. 52.63% and 47.37%

d. 54.00% and 46.00%

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When using the physical-volume method, what is Mr. DirtOut's approximate production cost per unit

ACCOUNTING

Multiple Choice

The Oxnard Corporation processes a liquid component up to the splitoff point where two products, Mr. DirtOut and Mr. SinkClean, are produced and sold. The following material was collected for the month of January. There was no beginning inventory.


Direct materials processed: 250,000 gallons (242,500 gallons of good product)


Production: Mr. DirtOut 147,500 gallons

Mr. SinkClean 95,000 gallons


Sales: Mr. DirtOut 140,500 at $110 per gallon

Mr. SinkClean 91,000 at $ 100 per gallon


The cost of purchasing 250,000 gallons of direct materials and processing it up to the splitoff point to yield a total of 242,500 gallons of good product was $380,000.


When using the physical-volume method, what is Mr. DirtOut's approximate production cost per unit?

a. $1.52

b. $1.54

c. $1.57

d. $1.61

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When using a physical-volume measure, what is the approximate amount of joint costs that will be allocated to Mr. DirtOut and Mr. SinkClean

ACCOUNTING

Multiple Choice

The Oxnard Corporation processes a liquid component up to the splitoff point where two products, Mr. DirtOut and Mr. SinkClean, are produced and sold. The following material was collected for the month of January. There was no beginning inventory.


Direct materials processed: 250,000 gallons (242,500 gallons of good product)


Production: Mr. DirtOut 147,500 gallons

Mr. SinkClean 95,000 gallons


Sales: Mr. DirtOut 140,500 at $110 per gallon

Mr. SinkClean 91,000 at $ 100 per gallon


The cost of purchasing 250,000 gallons of direct materials and processing it up to the splitoff point to yield a total of 242,500 gallons of good product was $380,000.


When using a physical-volume measure, what is the approximate amount of joint costs that will be allocated to Mr. DirtOut and Mr. SinkClean?

a. $231,116 and $148,884

b. $224,200 and $155,800

c. $227,202 and $152,798

d. $230,626 and $149,374

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What are the physical-volume proportions to allocate joint costs for Mr. DirtOut and Mr. SinkClean, respectively

ACCOUNTING

Multiple Choice

The Oxnard Corporation processes a liquid component up to the splitoff point where two products, Mr. DirtOut and Mr. SinkClean, are produced and sold. The following material was collected for the month of January. There was no beginning inventory.



Direct materials processed: 250,000 gallons (242,500 gallons of good product)


Production: Mr. DirtOut 147,500 gallons

Mr. SinkClean 95,000 gallons



Sales: Mr. DirtOut 140,500 at $110 per gallon

Mr. SinkClean 91,000 at $ 100 per gallon


The cost of purchasing 250,000 gallons of direct materials and processing it up to the splitoff point to yield a total of 242,500 gallons of good product was $380,000.


What are the physical-volume proportions to allocate joint costs for Mr. DirtOut and Mr. SinkClean, respectively?

a. 59.00% and 41.00%

b. 60.82% and 39.18%

c. 39.18% and 60.82%

d. 59.79% and 40.21%

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A reason why a physical-measure to allocate joint costs is less preferred than the sales value at splitoff is

ACCOUNTING

Multiple Choice

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 of the above are reasons why the sales value at splitoff method is preferred to a physical volume measure.

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Product X is sold for $8 a unit and Product Y is sold for $12 a unit

ACCOUNTING

Multiple Choice

Product X is sold for $8 a unit and Product Y is sold for $12 a unit. Each product can also be sold at the splitoff point. Product X can be sold for $5 and Product Y for $4. Joint costs for the two products totaled $4,000 for January for 600 units of X and 500 units of Y. What are the respective joint costs assigned each unit of products X and Y if the sales value at splitoff method is used?

a. $2.96 and $4.44

b. $4.00 and $4.55

c. $4.00 and $3.20

d. $4.55 and $4.55

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The Arvid Corporation manufactures widgets, gizmos, and turnbols from a joint process

ACCOUNTING

Multiple Choice

The Arvid Corporation manufactures widgets, gizmos, and turnbols from a joint process. May production is 4,000 widgets; 7,000 gizmos; and 8,000 turnbols. Respective per unit selling prices at splitoff are $15, $10, and $5. Joint costs up to the splitoff point are $75,000. If joint costs are allocated based upon the sales value at splitoff, what amount of joint costs will be allocated to the widgets?

a. $30,882

b. $26,471

c. $17,647

d. $28,125

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Yakima Manufacturing purchases trees from Cascade Lumber and processes them up to the splitoff point where two products (paper and pencil casings) are

ACCOUNTING

Multiple Choice

Yakima Manufacturing purchases trees from Cascade Lumber and processes them up to the splitoff 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 November:


Trees processed: 50 trees (yield is 30,000 sheets of paper and 30,000 pencil casings and no scrap)


Production: paper 30,000 sheets

pencil casings 30,000



Sales: paper 29,000 at $0.04 per page

pencil casings 30,000 at $0.10 per casing


Cost of purchasing 50 trees and processing them up to the splitoff point to yield 30,000 sheets of paper and 30,000 pencil casings is $1,500.



Yakima’s accounting department reported no beginning inventories and ending inventory of 1,000 sheets of paper.


What are the paper's and the pencils' approximate weighted cost proportions using the sales value at splitoff method, respectively?

a. 50.00% and 50.00%

b. 33.33% and 66.67%

c. 31.82% and 68.18%

d. none of the above

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If the sales value at splitoff method is used, what is the approximate production cost for each pencil casing

ACCOUNTING

Multiple Choice

Yakima Manufacturing purchases trees from Cascade Lumber and processes them up to the splitoff 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 November:


Trees processed: 50 trees (yield is 30,000 sheets of paper and 30,000 pencil casings and no scrap)


Production: paper 30,000 sheets

pencil casings 30,000



Sales: paper 29,000 at $0.04 per page

pencil casings 30,000 at $0.10 per casing


Cost of purchasing 50 trees and processing them up to the splitoff point to yield 30,000 sheets of paper and 30,000 pencil casings is $1,500.



Yakima’s accounting department reported no beginning inventories and ending inventory of 1,000 sheets of paper.


If the sales value at splitoff method is used, what is the approximate production cost for each pencil casing?

a. $0.0250

b. $0.0255

c. $0.0335

d. $0.0357

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If the sales value at splitoff method is used, what are the approximate joint costs assigned to ending inventory for paper

ACCOUNTING

Multiple Choice

Yakima Manufacturing purchases trees from Cascade Lumber and processes them up to the splitoff 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 November:


Trees processed: 50 trees (yield is 30,000 sheets of paper and 30,000 pencil casings and no scrap)



Production: paper 30,000 sheets

pencil casings 30,000



Sales: paper 29,000 at $0.04 per page

pencil casings 30,000 at $0.10 per casing


Cost of purchasing 50 trees and processing them up to the splitoff point to yield 30,000 sheets of paper and 30,000 pencil casings is $1,500.



Yakima’s accounting department reported no beginning inventories and ending inventory of 1,000 sheets of paper.


If the sales value at splitoff method is used, what are the approximate joint costs assigned to ending inventory for paper?

a. $14.29

b. $50.00

c. $435.00

d. $750.00

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What is the sales value at the splitoff point of the pencil casings

ACCOUNTING

Multiple Choice

Yakima Manufacturing purchases trees from Cascade Lumber and processes them up to the splitoff 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 November:


Trees processed: 50 trees (yield is 30,000 sheets of paper and 30,000 pencil casings and no scrap)



Production: paper 30,000 sheets

pencil casings 30,000



Sales: paper 29,000 at $0.04 per page

pencil casings 30,000 at $0.10 per casing


Cost of purchasing 50 trees and processing them up to the splitoff point to yield 30,000 sheets of paper and 30,000 pencil casings is $1,500.



Yakima’s accounting department reported no beginning inventories and ending inventory of 1,000 sheets of paper.


What is the sales value at the splitoff point of the pencil casings?

a. $300

b. $1,480

c. $3,000

d. $3,750

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What is the sales value at the splitoff point for paper

ACCOUNTING

Multiple Choice

Yakima Manufacturing purchases trees from Cascade Lumber and processes them up to the splitoff 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 November:


Trees processed: 50 trees (yield is 30,000 sheets of paper and 30,000 pencil casings and no scrap)



Production: paper 30,000 sheets

pencil casings 30,000



Sales: paper 29,000 at $0.04 per page

pencil casings 30,000 at $0.10 per casing


Cost of purchasing 50 trees and processing them up to the splitoff point to yield 30,000 sheets of paper and 30,000 pencil casings is $1,500.



Yakima’s accounting department reported no beginning inventories and ending inventory of 1,000 sheets of paper.


What is the sales value at the splitoff point for paper?

a. $120

b. $1,160

c. $1,200

d. $1,950

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The benefits-received criteria for allocating joint costs indicates market-based measures are preferred because

ACCOUNTING

Multiple Choice

The benefits-received criteria for allocating joint costs indicates 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. of none of the above.

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Which of the following statements is true in regard to the cause-and-effect relationship between allocated joint costs and individual products

ACCOUNTING

Multiple Choice

Which of the following statements is true in regard to the cause-and-effect relationship between allocated joint costs and 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-and-effect relationship.

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An example of a market-based approach to allocating joint costs is (are) allocating joint costs based on

ACCOUNTING

Multiple Choice

An example of a market-based approach to allocating joint costs is (are) allocating joint costs based on

a. sales value at splitoff method.

b. physical volume.

c. constant gross-margin percentage method.

d. both (a) and (c).

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All of the following methods may be used to allocate joint costs EXCEPT

ACCOUNTING

Multiple Choice

All of the following methods may be used to allocate joint costs EXCEPT

a. the constant gross-margin percentage method.

b. the estimated net realizable value method.

c. the present value allocation method.

d. the sales value at splitoff method

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