Question :
Objective 16.3
1) All of the following methods may be used : 1217013
Objective 16.3
1) All of the following methods may be used to allocate joint costs EXCEPT the:
A) constant gross-margin percentage method
B) estimated net realizable value method
C) present value allocation method
D) sales value at splitoff method
2) 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 are correct.
3) Which of the following is NOT a market-based approach to allocating costs?
A) sales value at splitoff
B) constant gross-margin percentage NRV
C) physical measures
D) net realizable value
4) The sales value at splitoff method:
A) allocates joint costs to joint products on the basis of the relative total sales value at the splitoff point
B) allocates joint costs to joint products on the basis of a comparable physical measure at the splitoff point
C) allocates joint costs to joint products on the basis of relative NRV
D) allocates joint costs to joint products in a way that each product has an identical gross-margin percentage
5) The physical-measure method:
A) allocates joint costs to joint products in a way that each product has an identical gross-margin percentage
B) allocates joint costs to joint products on the basis of a comparable physical measure at the splitoff point
C) allocates joint costs to joint products on the basis of the relative sales value at the splitoff point
D) allocates joint costs to joint products on the basis of relative NRV
6) The net realizable value method:
A) allocates joint costs to joint products on the basis of a comparable physical measure at the splitoff point
B) allocates joint costs to joint products on the basis of the relative sales value at the splitoff point
C) allocates joint costs to joint products in a way that each product has an identical gross-margin percentage
D) allocates joint costs to joint products on the basis of relative NRV
7) 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.
8) The benefits-received criteria for allocating joint costs indicate 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) None of these answers is correct.
Answer the following questions using the information below:
Yakima Manufacturing purchases trees from Cheney 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:100 trees (yield is 60,000 sheets of paper and 60,000 pencil casings
and no scrap)
Production:paper60,000 sheets
pencil casings60,000
Sales:paper58,000 at $0.04 per page
pencil casings60,000 at $0.10 per casing
The cost of purchasing 100 trees and processing them up to the splitoff point to yield 60,000 sheets of paper and 60,000 pencil casings is $3,000.
Yakima’s accounting department reported no beginning inventories and an ending inventory of 2,000 sheets of paper.
9) What is the sales value at the splitoff point for paper?
A) $240
B) $2,320
C) $2,400
D) $3,900
10) What is the sales value at the splitoff point of the pencil casings?
A) $600
B) $2,460
C) $6,000
D) $7,500
