Question : 11) Which of the following statements true in regard to : 1186061

 

11) 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) The cause-and-effect relationship depends on the relative costs to be incurred after split off.

E) There is no cause-and-effect relationship.

Use the information below to answer the following question(s).

 

Raynor Manufacturing purchases trees from Tree Nursery 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:

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 split off point to yield 30,000 sheets of paper and 30,000 pencil casings is $1,500.

 

Raynor Manufacturing’s accounting department reported no beginning inventories; however, ending inventory amounts reflected 1,000 sheets of paper in stock.

 

12) What is the paper’s sales value at the split off point?

A) $120

B) $1,160

C) $1,200

D) $1,950

E) $3,000

 

13) What are the pencil casings’ sales value at the split-off point?

A) $300

B) $1,480

C) $3,000

D) $3,750

E) $4,500

 

14) What are the paper’s and the pencil’s approximate weighted cost proportions using the sales value at split off method, respectively?

A) 28.57% and 71.43%

B) 33.33% and 66.67%

C) 40% and 60%

D) 49.00% and 51.00%

E) 50.00% and 50.00%

 

15) What are the approximate joint costs assigned to the paper ending inventory if joint costs are allocated using the sales value at split off method?

A) $14.29

B) $50.00

C) $428.55

D) $435.00

E) $750.00

 

16) What is the approximate cost assigned to the pencil casings if joint costs are allocated using the sales value at split off method?

A) $750

B) $765

C) $1,005

D) $1,071

E) $1,500

 

17) What is the paper’s production approximate cost per unit if the sales value at split off method is used?

A) $0.0143

B) $0.0150

C) $0.0250

D) $0.0259

E) $0.0300

18) What is the approximate production cost per unit for each pencil casing if the sales value at split off method is used?

A) $0.0250

B) $0.0255

C) $0.0335

D) $0.0357

E) $0.0533

 

19) Two finished products, [A & B], are sold for $16 a unit and $24 a unit, respectively. Each product can also be sold at the split off point. Product A can be sold for $10 and Product B for $8. Joint costs for the two products totalled $8,000 for January for 600 units of A and 500 units of B.

 

What are the respective joint costs assigned to each unit of products A and B if the sales value at split off method is used?

A) $5.92 and $8.88

B) $6.40 and $14.40

C) $6.40 and $9.10

D) $8.00 and $9.10

E) $8.00 and $6.40

 

20) Which method allocates joint costs on the basis of each product’s relative sales value at the split off point?

A) the constant gross-margin percentage NRV method

B) the estimated net realizable value method

C) the physical measure method

D) the sales value at split off method

E) the split off method