Question : Objective 16.3 1) Which of the following statements true of the : 1211876

Objective 16.3

1) Which of the following statements is true of the methods for allocating joint costs?

A) Constant gross-margin percentage method results in same joint production cost per unit  for all products.

B) Estimated net realizable value method results in same gross margin percentage for all products.

C) Present value allocation method is the least preferred method due to its complex calculations.

D) Sales value at splitoff method uses the sales value of the entire production of the accounting period to allocate costs.

2) An example of allocating joint costs using physical measures is allocating joint costs based on ________.

A) sales value at splitoff point

B) volume of the products

C) constant gross-margin percentage

D) net realizable value

3) In joint costing, which of the following is a market-based approach to allocating costs?

A) sales units

B) units of production

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) Which of the following statements is true of the methods for allocating joint costs?

A) The net realizable value method uses the sales value of the units sold during the accounting period to allocate joint costs.

B) The sales value at splitoff method always results in the same gross-margin percentage for all products.

C) The sales value at splitoff method allocates joint costs to each product in proportion to the sales value of total production.

D) The net realizable value method results in the same joint production cost per unit  for all products.

6) 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

7) 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

8) 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.

9) The benefits-received criteria for allocating joint costs indicate market-based measures are preferred because ________.

A) physical measures such as quantity are clear bases for allocating cost than other measures

B) physical measures are more difficult to calculate

C) revenues are usually the best indicators of the benefits received

D) revenues always remain consistent over short-run

Answer the following questions using the information below:

Bismite Corporation 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 October:

Trees processed:250 trees

Production:paper180,000 sheets

pencil casings180,000

Sales:paper174,000 at $0.12 per page

pencil casings178,500 at $0.15 per casing

The cost of purchasing 250 trees and processing them up to the splitoff point to yield 180,000 sheets of paper and 180,000 pencil casings is $12,500.

Bismite’s accounting department reported no beginning inventory.

10) What is the total sales value at the splitoff point for paper?

A) $26,775

B) $20,880

C) $21,600

D) $27,000