Question : 41) Which of the following statements true of Kenton’s joint : 1211863

 

41) Which of the following statements is true of Kenton’s joint cost allocations?

A) The gross margin is same for both products because constant gross margin percentage NRV method ignores profits earned before the splitoff point.

B) One product can receive negative joint costs allocations to bring the other unprofitable product to the overall average gross margin.

C) Kenton has chosen the easiest method for allocating its joint costs of production.

D) The gross profit percent of condensed milk is lower than the gross profit of butter cream.

42) 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) physical measures

 

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

A) Under the cause-and-effect criterion, the physical-measure method is highly desirable.

B) Byproducts are never excluded from the denominator used in the physical-measure method.

C) The NRV method is never used when the selling prices of joint products vary frequently.

D) The sales value at splitoff method follows the benefits-received criterion of cost allocation.

Answer the following questions using the information below:

 

The Brital Company processes unprocessed milk to produce two products, Butter Cream and Condensed Milk. The following information was collected for the month of June:

Direct Materials processed:28,000 gallons

 

Production:

Butter Cream

12,500

gallons

 

Condensed Milk

15,500

gallons

Sales:

Butter Cream

12,000

gallons

 

Condensed Milk

15,000

gallons

Sales:

Butter Cream

$2.5

per gallon

 

Condensed Milk

$5.5

per gallon

Separable costs in total:

Butter Cream

$13,500

 

 

Condensed Milk

$33,700

 

 

The costs of purchasing the of unprocessed milk and processing it up to the splitoff point to yield a total of 28,000 gallons of saleable product was $46,000.

 

The company uses constant gross-margin percentage NRV method to allocate the joint costs of production.

 

44) What is the constant gross margin percent for Brital?

A) 15%

B) 22%

C) 20%

D) 30%

45) What is the allocated joint costs of Butter Cream?

A) $33,700

B) $13,500

C) $34,500

D) $11,500

 

46) What is the allocated joint costs of Condensed Milk?

A) $34,500

B) $13,500

C) $33,700

D) $11,500

 

47) Which of the following statements is true of Brital?

A) The gross profit percent of condensed milk is lower than the gross profit of butter cream.

B) The gross margin is same for both products because constant gross margin percentage NRV method ignores profits earned before the splitoff point.

C) The gross profit of condensed milk is lower than the gross profit of butter cream.

D) The gross margin is allocated to the joint products in order to determine the joint-cost allocations.

48) If separable costs of Butter Cream was 16,000 and constant gross margin was 25%, what would have been the allocated joint costs of Condensed Milk?

A) $7,438

B) $7,538

C) $30,238

D) $30,338

 

49) If separable costs of Butter Cream was 16,000 and constant gross margin was 25%, what would have been the total allocated joint costs of production?

A) $37,675

B) $33,700

C) $30,238

D) $34,500

 

50) 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 any inventories.

C) In effect, this practice recognizes income before sales are made.

D) It will result in higher cost of goods sold and lesser profits.