Test bank cost accounting chapter 16

lOMoARcPSD|14818675

Chapter 16 test bank with answers Horngren's Cost
Accounting: A Managerial Emphasis, 16th Global Edition

Principles of Management Accounting (University of Queensland)

StuDocu is not sponsored or endorsed by any college or university
Downloaded by Aurora Putri Jehova ([email protected])

lOMoARcPSD|14818675

Cost Accounting: A Managerial Emphasis, 16e, Global Edition (Horngren)
Chapter16 CostAllocation:JointProductsandByproducts

16.1 Objective16.1

1)Whatisthenameofacostofproductionprocessthatyieldsmultipleproductssimultaneously?
A)byproduct
B)joint
C)main
D)separable
Answer:B
Diff:1
Objective:1
AACSB:Analyticalthinking

2)Whichofthefollowingstatementsbestdefinesplitoffpointinjointcosting?
A)Itisthepointatwhichmanagersdecidetodiscontinueoneormoreoftheproducts.
B)Itisthepointatwhichthemanagersdecidetooutsourcesomeofitsproductionprocesses.
C)Itisthejunctureinajointproductionprocesswhentwoormoreproductsbecomeseparately
identifiable.
D)Itisthejunctureatwhichdecisionsdeterminingjointcostsofvariousproductstobeproducedare
taken.
Answer:C
Diff:2
Objective:1
AACSB:Analyticalthinking

3)Whichofthefollowingstatementsistrueofjointproductionprocessanditscomponents?
A)Distributioncostsincurredbeyondthesplit-offpointassignabletoeachofthespecificproducts
identifiedatthesplit-offpointareconsideredasjointcosts.
B)Decisionsrelatingtothesaleorfurtherprocessingofeachidentifiableproductcanbemade
independentlyofdecisionsabouttheotherproductsbeyondthesplit-offpoint.
C)Whenajointproductionprocessyieldstwoormoreproductswithlow totalsalesvaluesrelativetothe
totalsalesvaluesofotherproducts,thoseproductsarecalledjointproducts.
D)Theprimarypurposeofjointcostingistoallocatetheseparablecoststotheindividualproductsthat
areeventuallysold.
Answer:B
Diff:2
Objective:1
AACSB:Analyticalthinking

1
Copyright © 2018 Pearson Education, Ltd.

Downloaded by Aurora Putri Jehova ([email protected])

lOMoARcPSD|14818675

4)Thechallengeofaproductionfacilitythatisproducingseveralproductsfrom ishowtoallocatethe
jointcoststhatareincurred________.
A)beforethesplit-offpoint
B)afterthesplit-offpoint
C)atthesplit-offpoint
D)attheendofproduction
Answer:C
Diff:1
Objective:1
AACSB:Analyticalthinking

5)Whichofthefollowingstatementsistrueofjointcosting?
A)Thecostsofaproductionprocessthatyieldsmultipleproductssimultaneouslyarecalledjointcosts.
B)Distributioncostsincurredbeyondthesplit-offpointthatareassignabletoeachofthespecificproducts
identifiedatthesplit-offpointareconsideredasjointcosts.
C)Theprimarypurposeofjointcostingistoallocatetheseparablecoststotheindividualproductsthat
areeventuallysold.
D)Jointcostingislessusefulforcompanieswhichmanufacturemultipleproductssimultaneouslyfrom
thesameproductionprocess.
Answer:A
Diff:2
Objective:1
AACSB:Applicationofknowledge

6)Whenasinglemanufacturingprocessyieldstwoproducts,oneofwhichhasarelativelyhighsales
valuecomparedtotheother,thetwoproductsarerespectivelyknownas________.
A)jointproductsandbyproducts
B)jointproductsandscrap
C)mainproductsandbyproducts
D)mainproductsandjointproducts
Answer:C
Diff:1
Objective:1
AACSB:Analyticalthinking

7)Whichofthefollowingstatementsbestdefinejointproducts?
A)Whenoneproducthasahightotalsalesvaluecomparedwiththetotalsalesvalueofotherproductsof
theprocess,thatproductiscalledajointproduct.
B)Productofajointproductionprocessthathavethesamesalesvaluecomparedwiththetotalsales
valueofthebyproductsiscalledajointproduct.
C)Whenoneproducthasalow totalsalesvaluecomparedwiththetotalsalesvalueofotherproductsof
theprocess,thatproductiscalledajointproduct.
D)Whenajointproductionprocessyieldstwoormoreproductswithhightotalsalesvaluesrelativeto
thetotalsalesvaluesofotherproducts,thoseproductsarecalledjointproducts.
Answer:D
Diff:2
Objective:1
AACSB:Analyticalthinking

2
Copyright © 2018 Pearson Education, Ltd.

Downloaded by Aurora Putri Jehova ([email protected])

lOMoARcPSD|14818675

8)Acompanyproducesthreeproductsfrom ajointproductionprocess::A,B,andC.Asapercentageof
totalsalesvalue,arepresents50%,B49.5%,andC.5%.ProductCcouldbeconsidereda________.
A)primaryproduct
B)mainproduct
C)byproduct
D)wasteproduct
Answer:C
Diff:1
Objective:1
AACSB:Analyticalthinking

9)Whichofthefollowingfactorswouldguideyouinclassifyingaproductasamainproductor
byproduct?
A)Numberofunitsperprocessingperiod
B)Weightorvolumeofoutputsperperiod
C)Percentageoftotalsalesvalue
D)Jointcostsincurreduptothesplit-offpoint
Answer:C
Diff:2
Objective:1
AACSB:Applicationofknowledge

10)Injointcosting,whichofthefollowingchangesmayleadtoachangeinproductclassification?
A)mainproductsalespriceincreasesduetoanew application
B)byproductsalespricedecreasesduetoanew governmentregulation
C)mainproductbecomestechnologicallyobsoleteandit'smarketvaluefallssignificantly
D)byproductlossesvalueduetoacompetingproducts
Answer:C
Diff:2
Objective:1
AACSB:Analyticalthinking

11)Timberlogsareprocessedintostandardlumberusedinhomeconstructionandwoodchipsthatwill
besoldtolandscapers.How wouldtheseproductsbeclassified?
A)primaryproducts
B)mainproducts
C)jointproducts
D)aprimaryproductandabyproduct
Answer:D
Diff:1
Objective:1
AACSB:Analyticalthinking

3
Copyright © 2018 Pearson Education, Ltd.

Downloaded by Aurora Putri Jehova ([email protected])

lOMoARcPSD|14818675

12)Whichofthefollowingstatementsistrueofmainproductsandbyproducts?
A)Abyproductwillneverbecomeamainproduct.
B)Amainproductwillneverbecomeabyproduct.
C)Productclassificationsmaychangeovertime.
D)Productclassificationsremainsconstantovertime.
Answer:C
Diff:2
Objective:1
AACSB:Analyticalthinking

13)Outputswithanegativesalesvaluebecauseofdisposalcostshavewhichofthefollowingimpacton
costs?
A)addedtocostofgoodssold
B)addedtojointproductioncostsandallocatedtojointormainproducts
C)addedtojointproductioncostsandallocatedtobyproductsandscrap
D)subtractedfrom productrevenue
Answer:B
Diff:3
Objective:1
AACSB:Analyticalthinking

14)Jointcostsareincurredbeyondthesplit-offpointandareassignabletoindividualproducts.
Answer:FALSE
Explanation:Jointcostsareincurredpriortothesplit-offpoint.
Diff:1
Objective:1
AACSB:Analyticalthinking

15)Jointcostingallocatesthejointcoststotheindividualproductsthatareeventuallysold.
Answer:TRUE
Diff:1
Objective:1
AACSB:Analyticalthinking

16)Separablecostsincludemanufacturingcostsonly.
Answer:FALSE
Explanation:Separablecostsincludemanufacturing,marketing,distribution,andothercosts.
Diff:2
Objective:1
AACSB:Analyticalthinking

17)Classificationofmainproducts,jointproducts,andbyproductscanalwaysbedonewithease.
Answer:FALSE
Explanation:Inpractice,distinctionsamongmainproducts,jointproducts,andbyproductsarenotso
clearcut.
Diff:1
Objective:1
AACSB:Analyticalthinking

4
Copyright © 2018 Pearson Education, Ltd.

Downloaded by Aurora Putri Jehova ([email protected])

lOMoARcPSD|14818675

18)Jointcostsarethecostsofaproductionprocessthatyieldsmultipleproductssimultaneously.
Answer:TRUE
Diff:1
Objective:1
AACSB:Analyticalthinking

19)Thejunctureinajointproductionprocesswhentwoproductsbecomeseparableisthebyproduct
point.
Answer:FALSE
Explanation:Thejunctureinajointproductionprocesswhentwoproductsbecomeseparableisthesplit-
offpoint.
Diff:1
Objective:1
AACSB:Analyticalthinking

20)Beforethesplit-offpoint,decisionsrelatingtothesaleorfurtherprocessingofeachidentifiable
productcannotbemadeindependentlyofdecisionsabouttheotherproducts.
Answer:TRUE
Diff:2
Objective:1
AACSB:Applicationofknowledge

21)Whenajointproductionprocessyieldsoneproductwithahightotalsalesvaluecomparedtothetotal
salesvalueoftheotherproductsoftheprocess,thatproductiscalledajointproduct.
Answer:FALSE
Explanation:Thatproductwouldbecalledamainproduct.
Diff:1
Objective:1
AACSB:Analyticalthinking

22)Allproductsyieldedfrom jointproductprocessinghavesomepositivevaluetothefirm.
Answer:FALSE
Explanation:Notallproductsyieldedfrom jointproductprocessinghavesomepositivevaluetothefirm.
Diff:1
Objective:1
AACSB:Analyticalthinking

23)Ifthevalueofabyproductdropssignificantly,itcouldalsobeviewedasajointproduct.
Answer:FALSE
Explanation:Ifthevalueofabyproductdropssignificantly,itwillremainasabyproductonly.
Diff:2
Objective:1
AACSB:Applicationofknowledge

5
Copyright © 2018 Pearson Education, Ltd.

Downloaded by Aurora Putri Jehova ([email protected])

lOMoARcPSD|14818675

24)Ineachofthefollowingindustries,identifypossiblejoint(orseverable)productsatthesplit-offpoint.
a. Coal
b. Petroleum
c. Dairy
d. Lamb
e. Lumber
f. CocoaBeans
g. ChristmasTrees
h. Salt
i. Cowhide
Answer:
a. Coke,Gas,Benzole,Tar,Ammonia
b. CrudeOil,Gas,RawLPG
c. Milk,Butter,Cheese,IceCream,Skim Milk
d. LambCuts,Tripe,Hides,Bones,Fat
e. Board,Newsprint,Shavings,Chips,etc.
f. CocoaButter,CocoaPowder,CocoaShells
g. ChristmasTrees,Wreaths,Decorations
h. Hydrogen,Chlorine,CausticSoda
i. Leather,Suede,ChewToys
Diff:3
Objective:1
AACSB:Analyticalthinking

25)Definethetermsmainproduct,jointproduct,andbyproduct.Giveatleastoneexampleofeachtype
ofproduct.
Answer:Mainproduct-Whenoneproducthasahightotalsalesvaluecomparedwiththetotalsales
valueofotherproductsoftheprocess.Ex.timberprocessedintolumber

Jointproduct-Whenajointproductionprocessyieldstwoormoreproductswithhightotalsalesvalue
comparedwiththetotalsalesvalueofotherproducts.Ex.crudeoilprocessedintogasolineandkerosene

Byproduct-Productsofajointproductionprocessthathavelow totalsalesvaluecomparedwiththetotal
salesvalueofthemainproductorjointproducts.Ex.woodchipscreatedwhentimberprocessedinto
lumber
Diff:2
Objective:1
AACSB:Analyticalthinking

6
Copyright © 2018 Pearson Education, Ltd.

Downloaded by Aurora Putri Jehova ([email protected])

lOMoARcPSD|14818675

26)SilverCompanyusesoneraw material,silverore,forallofitsproducts.Itspendsconsiderabletime
gettingthesilverfrom theorebeforeitstartstheactualprocessingofthefinishedproducts,rings,lockets,
etc.Traditionally,thecompanymadeoneproductatatimeandchargedtheproductwithallcostsof
production,from oretofinalinspection.However,inrecentmonths,thecostaccountingreportshavebeen
somewhatdisturbingtomanagement.Itseemsthatsomeofthefinishedproductsarecostingmorethan
theyshould,eventothepointofapproachingtheirretailvalue.Ithasbeennotedbytheaccounting
managerthatthisproblem beganwhenthecompanystartedbuyingorefrom differentpartsoftheworld,
someofwhichrequiredifficultextractionmethods.

Required:
Canyouexplainhowthecompanymightchangeitsaccountingsystem toreflectthereportingproblems
better?Arethereotherproblemswiththepurchasingarea?
Answer:Itappearsthatthecompanyneedstostartassigningallextractioncoststoajoint-costcategory.It
isunfairthatthefinishedproductsreceiveahighcostsimplybecauseacertainbatchoforewasvery
expensivetorunthroughtheextractionprocesswhenthenextfinishedproductswereproducedfrom
silverthatwaseasytoextract.

Ifallextractioncostsareconsideredjoint,theneachfinishedproductwouldshareintheaveragecostof
extraction,ratherthanbeingchargedwiththecostofaspecificbatch.Thisshouldresultincoststhatare
morereflectiveoftheproduct'sactualcost.

Additionalproblemsmaybewiththepurchasingdepartment.Theaccountingdepartmentmayhelp
highlighttheproblem butitdoesnotpinpointtheactualproblem.Maybethecompanyshouldbuy
refinedsilverorelsehireexpertsinthemineralsareaaspartofthepurchasingteam.
Diff:2
Objective:1
AACSB:Applicationofknowledge

27)Whatarejointcosts,separablecosts,andasplit-offpoint?
Answer:Jointcostsarethecostsofasingleproductionprocessthatyieldmultipleproducts
simultaneously.
Separablecostsareallcostsincurredbeyondthesplit-offpointthatareassignabletoeachofthespecific
productsidentifiedatthesplit-offpoint.
Thesplit-offpointisthejunctureinajointproductionprocesswhentheproductsbecomeseparately
identifiable.Anexampleisthepointatwhichcoalbecomescoke,naturalgas,andotherproducts.
Diff:2
Objective:1
AACSB:Analyticalthinking

28)Discussinbriefhow easyitisforcompaniestoclassifyproductsasmainproducts,jointproducts,and
byproducts.
Answer:Distinctionsamongmainproducts,jointproducts,andbyproductsarenotsoclearcutin
practice.Companiesusedifferentthresholdsfordeterminingwhethertherelativesalesvalueofaproduct
ishighenoughforittobeconsideredajointproduct.Moreover,theclassificationofproductscanchange
overtime,especiallyforproductswhosesellingpriceschangefrequently.
Diff:2
Objective:1
AACSB:Analyticalthinking

29)Explainthedifferencebetweenajointproductandabyproduct.Canabyproducteverbecomeajoint
product?Also,canajointproducteverbecomeabyproduct?
Answer:Thedifferentiatingfactorbetweenajointproductandabyproductisthesalesvalueatthesplit-
offpoint.Jointproductshavehightotalsalesvalueatthesplit-offpoint.Abyproducthasalow totalsales
valueatthesplit-offpoint.Productscanchangefrom byproductstojointproductswhentheirtotalsales
valuesincreasesignificantly.Also,productscanchangefrom jointproductstobyproductswhentheir
totalsalesvaluesdecreasesignificantly.

7
Copyright © 2018 Pearson Education, Ltd.

Downloaded by Aurora Putri Jehova ([email protected])

lOMoARcPSD|14818675

Diff:2
Objective:1
AACSB:Analyticalthinking

16.2 Objective16.2

1)WhichofthefollowingwouldnotbeaGAAPormanagerialaccountingreasonforallocatingjoint
costs?
A)tocalculatecostofgoodssold
B)toanalyzetheprofitabilityofvariousproducts
C)forreimbursementofcostsunderafederalcontract
D)toevaluatetheperformanceofdivisionmanagers
Answer:A
Diff:2
Objective:2
AACSB:Applicationofknowledge

2)Whichofthefollowingwouldexplainwhyacompanymightneedtofollow verystringentrulesthat
specifythewayinwhichjointcostsareassignedtoproducts?
A)tosatisfyafederalcontractreimbursementstipulations
B)Sothatcostofgoodssoldisaccurateforincometaxpurposes
C)tosatisfyFASB
D)toincreasemarketshare
Answer:A
Diff:2
Objective:2
AACSB:Analyticalthinking

3)Oneofthereasonstoallocatejointcoststoindividualproductsistohavecostsreimbursedundera
federalcost=pluscontract.
Answer:TRUE
Diff:1
Objective:2
AACSB:Analyticalthinking

4)Allocatingjointcoststoindividualproductscanbehelpfulforlitigationsettlementpurposesinwhich
thecostsofjointproductsorservicesarekeyinputs.
Answer:TRUE
Diff:1
Objective:2
AACSB:Analyticalthinking

8
Copyright © 2018 Pearson Education, Ltd.

Downloaded by Aurora Putri Jehova ([email protected])

lOMoARcPSD|14818675

5)Listthreereasonswhyweallocatejointcoststoindividualproductsorservices.Giveanexampleof
whentheparticularcostallocationreasonwouldcomeintouse.
Answer:
a. Forinventorycosting,andcostofgoodssoldcomputationsforfinancialaccountingpurposes.

Example:Costofgoodssoldandendinginventoryvaluationisnecessaryforreportstoshareholders
andfortheinlandrevenueservice.

b. Forinternalcostingandcostofgoodssoldcomputationsforinternalreportingpurposes.
Example:Thesecomputationsarenecessaryfordivisionprofitabilityanalysis.

c. Reimbursementundercontracts.
Example:Afirm producesmultipleproductsorservices-andusesthesameresourcesandfacilitiesto

producetheproductsorservices.Butnotallthefirm'sproductsareunderthecontract.Thefirm must
allocatethecostofthesesharedfacilitiesorresourcestoreflecttheportionusedbytheproductunderthe
contract.

d. Insurancesettlementcomputations.
Example:Whereabusinesswithmultipleproductsorservicesclaim lossesunderaninsurancepolicy

andwantstocalculatetheloss.Theinsurancecompanyandtheinsuredmustagreeonthevalueofthe
loss.

e. Rateregulation.Whencompaniesaresubjecttorateregulation,theallocationofjointcostscanbea
significantfactorindeterminingtheregulatedrates.

Example:Crudeoilandnaturalgasareproducedoutofacommonwell.
Diff:2
Objective:2
AACSB:Analyticalthinking

6)Whatarethereasonsforallocatingjointcoststoindividualproductsorservices?
Answer:Thejointcostsshouldbeallocatedtoindividualproductsorservicestocomputeinventoriable
costsandthecostofgoodssoldforexternalreportingpurposes.Absorptioncostingisrequiredfor
incometaxreportingwhichnecessitatestheallocationofjointmanufacturingorprocessingcoststo
products.Thecostsshouldbeallocatedtoalsoallow forcomputingcostofgoodssoldandinventoriable
costsforinternalreportingpurposesofcomputingdivisionprofitsandtoevaluatetheperformanceof
divisionmanagers.Thecostswillbereimbursedundercontractsusingacostplussystem,oftenfoundin
governmentcontractswhichcallsforallocationofjointcosts.Anotherreasonforthecostallocationisto
allow forpropervaluationandsettlementininsuranceclaimsfordamages.Also,wherejointproductsare
regulated,propercostingisessential.Allocatingjointcostscansupportlitigationwherethejointproduct
isakeyinput.
Diff:2
Objective:2
AACSB:Analyticalthinking

9
Copyright © 2018 Pearson Education, Ltd.

Downloaded by Aurora Putri Jehova ([email protected])

lOMoARcPSD|14818675

16.3 Objective16.3

1)Whichofthefollowingstatementsistrueofthemethodsforallocatingjointcosts?
A)Constantgross-marginpercentagemethodresultsinsamejointproductioncostperunitforall
products.
B)Estimatednetrealizablevaluemethodresultsinsamegrossmarginpercentageforallproducts.
C)Presentvalueallocationmethodistheleastpreferredmethodduetoitscomplexcalculations.
D)Salesvalueatsplit-offmethodusesthesalesvalueoftheentireproductionoftheaccountingperiodto
allocatecosts.
Answer:D
Diff:2
Objective:3
AACSB:Analyticalthinking

2)Anexampleofallocatingjointcostsusingphysicalmeasuresisallocatingjointcostsbasedonthe
________.
A)salesvalueatsplit-offpoint
B)volumeoftheproductsproduced
C)constantgross-marginpercentage
D)netrealizablevalue
Answer:B
Diff:2
Objective:3
AACSB:Analyticalthinking

3)Whichofthefollowingisaisamarket-basedapproachtoallocatingjointcosts?
A)salesunits
B)unitsofproduction
C)physicalmeasures
D)netrealizablevalue
Answer:D
Diff:2
Objective:3
AACSB:Analyticalthinking

4)How doesthesalesvalueatsplit-offmethodallocatejointcosts?
A)allocatesjointcoststojointproductsonthebasisoftherelativetotalsalesvalueatthesplit-offpoint
B)allocatesjointcoststojointproductsonthebasisofacomparablephysicalmeasureatthesplit-offpoint
C)allocatesjointcoststojointproductsonthebasisofrelativeNRV
D)allocatesjointcoststojointproductsinawaythateachproducthasanidenticalgross-margin
percentage
Answer:A
Diff:2
Objective:3
AACSB:Analyticalthinking

10
Copyright © 2018 Pearson Education, Ltd.

Downloaded by Aurora Putri Jehova ([email protected])

lOMoARcPSD|14818675

5)Whichofthefollowingstatementsistrueofthemethodsforallocatingjointcosts?
A)Thenetrealizablevaluemethodusesthesalesvalueoftheunitssoldduringtheaccountingperiodto
allocatejointcosts.
B)Thesalesvalueatsplit-offmethodalwaysresultsinthesamegross-marginpercentageforallproducts.
C)Thesalesvalueatsplit-offmethodallocatesjointcoststoeachproductinproportiontothesalesvalue
oftotalproduction.
D)Thenetrealizablevaluemethodresultsinthesamejointproductioncostperunitforallproducts.
Answer:C
Diff:2
Objective:3
AACSB:Analyticalthinking

6)How doesthephysical-measuremethodallocatejointcosts?
A)allocatesjointcoststojointproductsinawaythateachproducthasanidenticalgross-margin
percentage
B)allocatesjointcoststojointproductsonthebasisofacomparablephysicalmeasureatthesplit-offpoint
C)allocatesjointcoststojointproductsonthebasisoftherelativesalesvalueatthesplit-offpoint
D)allocatesjointcoststojointproductsonthebasisofrelativeNRV
Answer:B
Diff:2
Objective:3
AACSB:Analyticalthinking

7)How doesthenetrealizablevaluemethodallocatejointcosts?
A)allocatesjointcoststojointproductsonthebasisofacomparablephysicalmeasureatthesplit-offpoint
B)allocatesjointcoststojointproductsonthebasisoftherelativesalesvalueatthesplit-offpoint
C)allocatesjointcoststojointproductsinawaythateachproducthasanidenticalgross-margin
percentage
D)allocatesjointcoststojointproductsonthebasisofrelativeNRV
Answer:D
Diff:2
Objective:3
AACSB:Analyticalthinking

8)Whichofthefollowingformulaswouldcalculatethenetrealizablevalueofaproduct?
A)salesvalueatthesplit-offpointlesscosttoproduceuptothesplit-offpoint
B)salesvaluexconstantgross-margin
C)finalsalesvalueminuscostofgoodssold
D)finalsalesvalueminusseparablecosts
Answer:D
Diff:2
Objective:3
AACSB:Analyticalthinking

11
Copyright © 2018 Pearson Education, Ltd.

Downloaded by Aurora Putri Jehova ([email protected])

lOMoARcPSD|14818675

9)Whichofthefollowingbestdescribeshow theconstantgross-marginpercentageNRVmethodallocates
jointcosts?
A)agrossmarginiscalculatedandforeachproductandthenthegrossmarginisdeductedalongwith
separablecostsfrom thefinalsalesvalueofaproducttoderivethejointcostallocationforaproduct
B)anoverallgrossmarginiscalculatedandforeachproductandthenthegrossmarginisdeductedalong
withseparablecostsfrom thefinalsalesvalueofaalltheproductsproducedinthejointprocessingand
theallocationsarethenmadebasedonphysicalvolumemeasures
C)anoverallgrossmarginiscalculatedandforeachproductthegrossmarginisdeductedalongwith
separablecostsfrom thefinalsalesvalueofaproducttoderivethejointcostallocationfortheproduct
D)agrossmarginiscalculatedandforeachproductandthengrossmarginisdeductedalongfrom the
finalsalesvalueofaproducttoderivethejointcostallocationforaproduct.
Answer:C
Diff:2
Objective:3
AACSB:Analyticalthinking

10)BismiteCorporationpurchasestreesfrom Cheneylumberandprocessesthem uptothesplit-offpoint
wheretwoproducts(paperandpencilcasings)areobtained.Theproductsarethensoldtoan
independentcompanythatmarketsanddistributesthem toretailoutlets.Thefollowinginformationwas
collectedforthemonthofOctober:

Treesprocessed: 310trees 180,000sheets
Production: paper 180,000
pencilcasings 170,000at$0.20perpage
Sales: paper 177,500at$0.24percasing
pencilcasings

Thecostofpurchasing310treesandprocessingthem uptothesplit-offpointtoyield180,000sheetsof
paperand180,000pencilcasingsis$12,500.

Bismite'saccountingdepartmentreportednobeginninginventory.

Whatisthetotalsalesvalueatthesplit-offpointforpaper?
A)$42,600
B)$34,000
C)$36,000
D)$43,200
Answer:C
Explanation:Salesvalueofpaper=180,000sheets×$0.20=$36,000
Diff:2
Objective:3
AACSB:Applicationofknowledge

12
Copyright © 2018 Pearson Education, Ltd.

Downloaded by Aurora Putri Jehova ([email protected])

lOMoARcPSD|14818675

11)BismiteCorporationpurchasestreesfrom Cheneylumberandprocessesthem uptothesplit-offpoint
wheretwoproducts(paperandpencilcasings)emergefrom theprocess.Theproductsarethensoldtoan
independentcompanythatmarketsanddistributesthem toretailoutlets.Thefollowinginformationwas
collectedforthemonthofOctober:

Treesprocessed: 270trees 150,000sheets
Production: paper 150,000
pencilcasings 137,000at$0.10perpage
Sales: paper 149,000at$0.14percasing
pencilcasings

Thecostofpurchasing270treesandprocessingthem uptothesplit-offpointtoyield150,000sheetsof
paperand150,000pencilcasingsis$14,500.

Bismite'saccountingdepartmentreportednobeginninginventory.

Whatisthetotalsalesvalueatthesplit-offpointofthepencilcasings?
A)$15,000
B)$21,000
C)$20,860
D)$13,700
Answer:B
Explanation:Salesvalueofpencils=150,000casings×$0.14=$21,000
Diff:2
Objective:3
AACSB:Applicationofknowledge

13
Copyright © 2018 Pearson Education, Ltd.

Downloaded by Aurora Putri Jehova ([email protected])

lOMoARcPSD|14818675

12)BismiteCorporationpurchasestreesfrom Cheneylumberandprocessesthem uptothesplit-offpoint
wheretwoproducts(paperandpencilcasings)emergefrom theprocess.Theproductsarethensoldtoan
independentcompanythatmarketsanddistributesthem toretailoutlets.Thefollowinginformationwas
collectedforthemonthofOctober:

Treesprocessed: 270trees 180,000sheets
Production: paper 180,000
pencilcasings 166,000at$0.20perpage
Sales: paper 176,000at$0.23percasing
pencilcasings

Thecostofpurchasing270treesandprocessingthem uptothesplit-offpointtoyield180,000sheetsof
paperand180,000pencilcasingsis$15,000.

Bismite'saccountingdepartmentreportednobeginninginventory.

Whatarethepaper'sandthepencil'sapproximateweightedcostproportionsusingthesalesvalueat
split-offmethod,respectively?
A)50.00% and50.00%
B)45.06% and54.94%
C)48.54% and51.46%
D)46.51% and53.49%
Answer:D
Explanation:Paper:180,000sheets×$0.20=$36,000
Pencils:180,000casings×$0.23=$41,400
Weightedcostproportions-Paper:$36,000/($36,000+$41,400)=46.51%
Weightedcostproportions-Pencil:$41,400/($36,000+$41,400)=53.49%
Diff:3
Objective:3
AACSB:Applicationofknowledge

14
Copyright © 2018 Pearson Education, Ltd.

Downloaded by Aurora Putri Jehova ([email protected])

lOMoARcPSD|14818675

13)BismiteCorporationpurchasestreesfrom Cheneylumberandprocessesthem uptothesplit-offpoint
wheretwoproducts(paperandpencilcasings)emergefrom theprocess.Theproductsarethensoldtoan
independentcompanythatmarketsanddistributesthem toretailoutlets.Thefollowinginformationwas
collectedforthemonthofOctober:

Treesprocessed: 310trees 190,000sheets
Production: paper 190,000
pencilcasings 178,000at$0.10perpage
Sales: paper 189,000at$0.14percasing
pencilcasings

Thecostofpurchasing310treesandprocessingthem uptothesplit-offpointtoyield190,000sheetsof
paperand190,000pencilcasingsis$13,500.

Bismite'saccountingdepartmentreportednobeginninginventory.

Ifthesalesvalueatsplit-offmethodisused,whataretheapproximatejointcostsassignedtoending
inventoryforpaper?(Roundintermediarypercentagestothenearesthundredth.)
A)$355.29
B)$29.61
C)$497.34
D)$379.24
Answer:A
Explanation:Paper:190,000sheets×$0.10=$19,000
Pencils:190,000casings×$0.14=$26,600
Weightedcostproportions-Paper:$19,000/($19,000+$26,600)=41.67%
Endinginventory=190,000-178,000=12,000sheets
Jointcostsassignedtoendinginventoryforpaper=41.67% ×$13,500×(12,000/190,000)=$355.29
Diff:3
Objective:3
AACSB:Applicationofknowledge

15
Copyright © 2018 Pearson Education, Ltd.

Downloaded by Aurora Putri Jehova ([email protected])

lOMoARcPSD|14818675

14)BismiteCorporationpurchasestreesfrom Cheneylumberandprocessesthem uptothesplit-offpoint
wheretwoproducts(paperandpencilcasings)emergefrom theprocess.Theproductsarethensoldtoan
independentcompanythatmarketsanddistributesthem toretailoutlets.Thefollowinginformationwas
collectedforthemonthofOctober:

Treesprocessed: 330trees 190,000sheets
Production: paper 190,000
pencilcasings 184,000at$0.10perpage
Sales: paper 186,500at$0.14percasing
pencilcasings

Thecostofpurchasing330treesandprocessingthem uptothesplit-offpointtoyield190,000sheetsof
paperand190,000pencilcasingsis$15,500.

Bismite'saccountingdepartmentreportednobeginninginventory.

Ifthesalesvalueatsplit-offmethodisused,whatistheapproximateproductioncostforeachpencil
casing?(Roundintermediarypercentagestothenearesthundredth.)
A)$0.035
B)$0.049
C)$0.034
D)$0.048
Answer:D
Explanation:Paper:190,000sheets×$0.10=$19,000
Pencils:190,000casings×$0.14=$26,600
Productioncostforeachpencilcasing=[($26,600/($19,000+$26,600)×$15,500)]/190,000=$0.048
Diff:3
Objective:3
AACSB:Applicationofknowledge

16
Copyright © 2018 Pearson Education, Ltd.

Downloaded by Aurora Putri Jehova ([email protected])

lOMoARcPSD|14818675

15)BismiteCorporationpurchasestreesfrom Cheneylumberandprocessesthem uptothesplit-offpoint
wheretwoproducts(paperandpencilcasings)emerge.Theproductsarethensoldtoanindependent
companythatmarketsanddistributesthem toretailoutlets.Thefollowinginformationwascollectedfor
themonthofOctober:

Treesprocessed: 350trees 150,000sheets
Production: paper 150,000
pencilcasings 144,000at$0.10perpage
Sales: paper 147,000at$0.15percasing
pencilcasings

Thecostofpurchasing350treesandprocessingthem uptothesplit-offpointtoyield150,000sheetsof
paperand150,000pencilcasingsis$15,500.

Bismite'saccountingdepartmentreportednobeginninginventory.

Ifthesalesvalueatsplit-offmethodisused,whatistheapproximateproductioncostforeachpaper
sheet?(Roundintermediarypercentagestothenearesthundredth.)
A)$0.043
B)$0.065
C)$0.041
D)$0.062
Answer:C
Explanation:Paper:150,000sheets×$$0.10=$15,000
Pencils:150,000casings×$0.15=$22,500
Productioncostofeachpapersheet=[($15,000/($15,000+$22,500)×$15,500)]/150,000=$0.0413
(roundto$0.041)
Diff:3
Objective:3
AACSB:Applicationofknowledge

17
Copyright © 2018 Pearson Education, Ltd.

Downloaded by Aurora Putri Jehova ([email protected])

lOMoARcPSD|14818675

16)TheBerkelCorporationmanufacturesWidgets,Gizmos,andTurnbolsfrom ajointprocess.June

productionis7000widgets;10,500gizmos;and12,500turnbols.Respectiveperunitsellingpricesatsplit-

offare$80,$55,and$30.Jointcostsuptothesplit-offpointare$188,500.Ifjointcostsareallocatedbased

uponthesalesvalueatsplit-off,whatamountofjointcostswillbeallocatedtothewidgets?(Donotround

anyintermediarycalculations.)

A)$23,492

B)$69,792

C)$46,736

D)$71,973

Answer:B

Explanation:Widgets:$80×7000= $560,000

Gizmos:$55×10,500 = $577,500

Turnbols:$30×12,500 = $375,000

Total =$1,512,500

JointcostsallocatedtotheWidgets=$560,000/$1,512,500×$188,500=$69,792
Diff:3
Objective:3
AACSB:Applicationofknowledge

17)TheBerkelCorporationmanufacturesWidgets,Gizmos,andTurnbolsfrom ajointprocess.June

productionis10,000widgets;13,500gizmos;and15,000turnbols.Respectiveperunitsellingpricesat

split-offare$95,$60,and$20.Jointcostsuptothesplit-offpointare$187,500.Whatamountofjointcosts

willbeallocatedtotheTurnbols?(Donotroundanyintermediarycalculations.)

A)$27,306

B)$17,066

C)$73,726

D)$86,468

Answer:A

Explanation:Widgets:$95×10,000= $950,000

Gizmos: $60×13,500 = $810,000

Turnbols:$20×15,000 = $300,000

Total = $2,060,000

JointcostsallocatedtotheTurnbols=$300,000/$2,060,000×$187,500=$27,306

Diff:3

Objective:3

AACSB:Applicationofknowledge

18
Copyright © 2018 Pearson Education, Ltd.

Downloaded by Aurora Putri Jehova ([email protected])

lOMoARcPSD|14818675

18)TheBerkelCorporationmanufacturesWidgets,Gizmos,andTurnbolsfrom ajointprocess.June

productionis9000widgets;12,500gizmos;and14,500turnbols.Respectiveperunitsellingpricesatsplit-

offare$75,$50,and$25.Jointcostsuptothesplit-offpointare$188,000.Whatamountofjointcostswill

beallocatedtotheGizmos?(Donotroundanyintermediarycalculations.)

A)$40,992

B)$21,260

C)$70,677

D)$76,331

Answer:C

Explanation:Widgets:$75×9000= $675,000

Gizmos: $50×12,500 = $625,000

Turnbols:$25×14,500 = $362,500

Total = $1,662,500

JointcostsallocatedtotheGizmos=$625,000/$1,662,500×$188,000=$70,677

Diff:3

Objective:3

AACSB:Applicationofknowledge

19)Whichofthefollowingreasonsexplainwhyaphysical-measuretoallocatejointcostsislesspreferred
thanthesalesvalueatsplit-offpoint?
A)aphysicalmeasuresuchasvolumeisdifficulttoestimatethansalesvalue
B)physicalvolumeusuallyhaslittlerelationshiptotherevenueproducingpowerofproducts
C)aphysicalmeasureusuallyresultsinlesscostsbeingallocatedtotheproductthatweighsthemost
D)customerswilleasilyunderstandthattheproductsareoverpriced
Answer:B
Diff:2
Objective:3
AACSB:Analyticalthinking

19
Copyright © 2018 Pearson Education, Ltd.

Downloaded by Aurora Putri Jehova ([email protected])

lOMoARcPSD|14818675

20)TheAlfarm Corporationprocessesrawmilkuptothesplit-offpointwheretwoproducts,cream and
liquidskim,areproducedandsold.Therewasnobeginninginventory.Thefollowingmaterialwas
collectedforthemonthofFebruary:

Directmaterialsprocessed: 820,000gallons(797,500gallonsofgoodproduct)
443,000gallons
Production: Cream 354,500gallons
424,000at$130pergallon
Liquidskim 344,500at$115pergallon

Sales: Cream

Liquidskim

Thecostofpurchasing820,000gallonsofdirectmaterialsandprocessingituptothesplit-offpointto
yieldatotalof797,500gallonsofgoodproductwas$2,350,000.Whatarethephysical-volumeproportions
toallocatejointcostsforcream andliquidskim,respectively?
A)54.02% and45.98%
B)55.55% and44.45%
C)50.00% and50.00%
D)53.17% and46.83%
Answer:B
Explanation:Cream:443,000/797,500=55.55%
Liquidskim:354,500/797,500=44.45%
Diff:3
Objective:3
AACSB:Applicationofknowledge

21)TheAlfarm Corporationprocessesrawmilkuptothesplit-offpointwheretwoproducts,cream and

liquidskim,areproducedandsold.Therewasnobeginninginventory.Thefollowingmaterialwas

collectedforthemonthofFebruary:

Directmaterialsprocessed: 780,000gallons(758,500gallonsofgoodproduct)

Production: Cream 443,500gallons

Liquidskim 315,000gallons

Sales: Cream 425,500at$110pergallon

Liquidskim 305,000at$95pergallon

Thecostofpurchasing780,000gallonsofdirectmaterialsandprocessingituptothesplit-offpointto
yieldatotalof758,500gallonsofgoodproductwas$2,310,000.Whenusingaphysical-volumemeasure,
whatistheapproximateamountofjointcoststhatwillbeallocatedtocream andliquidskim?(Round
intermediarypercentagestothenearesthundredth.)
A)$1,350,657and$959,343
B)$1,155,000and$1,155,000
C)$1,345,524and$964,476
D)$1,313,442and$996,558
Answer:A
Explanation:Cream:443,500/758,500=58.47%
Liquidskim:315,000/758,500=41.53%
JointcostsallocatedtoCream =$2,310,000×58.47%=$1,350,657
JointcostsallocatedtoLiquidskim =$2,310,000×41.53%=$959,343
Diff:3
Objective:3
AACSB:Applicationofknowledge

22)TheAlfarm Corporationprocessesrawmilkuptothesplit-offpointwheretwoproducts,cream and
liquidskim,areproducedandsold.Therewasnobeginninginventory.Thefollowingmaterialwas
collectedforthemonthofFebruary:

Directmaterialsprocessed: 760,000gallons(738,000gallonsofgoodproduct)

20
Copyright © 2018 Pearson Education, Ltd.

Downloaded by Aurora Putri Jehova ([email protected])

lOMoARcPSD|14818675

Production: Cream 445,000gallons
Sales: Liquidskim 293,000gallons
Cream 425,000at$120pergallon
Liquidskim 283,000at$110pergallon

Thecostofpurchasing760,000gallonsofdirectmaterialsandprocessingituptothesplit-offpointto
yieldatotalof738,000gallonsofgoodproductwas$2,350,000.Whenusingthephysical-volumemethod,
whatisCream'sapproximateproductioncostpergallon?(Roundintermediarypercentagestothenearest
hundredth.)
A)$2.64
B)$3.09
C)$3.18
D)$3.33
Answer:C
Explanation:Cream:445,000/738,000=60.3%
JointcostsallocatedtoCream =$2,350,000×60.3%=$1,417,050
ProductioncostpergallonforCream =$1,417,050/445,000=$3.18
Diff:3
Objective:3
AACSB:Applicationofknowledge

21
Copyright © 2018 Pearson Education, Ltd.

Downloaded by Aurora Putri Jehova ([email protected])

lOMoARcPSD|14818675

23)TheAlfarm Corporationprocessesrawmilkuptothesplit-offpointwheretwoproducts,cream and
liquidskim,areproducedandsold.Therewasnobeginninginventory.Thefollowingmaterialwas
collectedforthemonthofFebruary:

Directmaterialsprocessed: 800,000gallons(778,500gallonsofgoodproduct)
443,500gallons
Production: Cream 335,000gallons
424,500at$130pergallon
Liquidskim 324,000at$120pergallon

Sales: Cream

Liquidskim

Thecostofpurchasing800,000gallonsofdirectmaterialsandprocessingituptothesplit-offpointto
yieldatotalof778,500gallonsofgoodproductwas$2,350,000.Whichofthefollowingstatementsabout
Alfarm'sjointproductioncostsistrue?
A)Thegross-marginpercentagepergallonofCream andLiquidskim areequalbecausejointcostsare
allocatedbasedonthenumberofgallons.
B)Thegross-marginpercentagepergallonofCream ishigherthangrossmarginpercentagepergallonof
Liquidskim becauseofCream'shigherproductionvolume.
C)ThejointproductioncostpergallonofCream andLiquidskim areequalbecausejointcostsare
allocatedbasedonthenumberofgallons.
D)ThejointproductioncostpergallonofCream ishigherthanjointproductioncostpergallonofLiquid
skim becauseofCream'shigherproductionvolume.
Answer:C
Diff:3
Objective:3
AACSB:Applicationofknowledge

22
Copyright © 2018 Pearson Education, Ltd.

Downloaded by Aurora Putri Jehova ([email protected])

lOMoARcPSD|14818675

24)NetzoneCompanyisinsemiconductorindustryandfabricationofsilicon-waferchipssplitsofftwo
typesofmemorychips,StandardandPremium.Thefollowinginformationwascollectedforlastquarter
ofthecalendaryear:

Directmaterialsprocessed: 400kgs(Bothstandardandpremium chipsweigh20gramseach)
13,000chips
Production: Standard 7400chips
12,600at$190perchip
Premium 7000at$240perchip

Sales: Standard

Premium

Thecostofpurchasing400kgsofdirectmaterialsandprocessingituptothesplit-offpointtoyieldatotal
of20,400chipsofgoodproductswas$2,020,000.Beginninginventoriestotalled130chipsforStandard
and60chipsforPremium.Endinginventoryamountsreflected130chipsofStandardand60chipsof
Premium.OctobercostsperunitwerethesameasNovember.Whatarethephysical-volumeproportions
forproductsStandardandPremium,respectively?
A)64.29% and35.71%
B)66.33% and33.67%
C)63.73% and36.27%
D)50.00% and50.00%
Answer:C
Explanation:
Standard:13,000/(13,000+7400)=63.73%
Premium:7400/(13,000+7400)=36.27%
Diff:3
Objective:3
AACSB:Applicationofknowledge

23
Copyright © 2018 Pearson Education, Ltd.

Downloaded by Aurora Putri Jehova ([email protected])

lOMoARcPSD|14818675

25)NetzoneCompanyisinsemiconductorindustryandfabricationofsilicon-waferchipssplitsofftwo
typesofmemorychips,StandardandPremium.Thefollowinginformationwascollectedforlastquarter
ofthecalendaryear:

Directmaterialsprocessed: 400kgs(Bothstandardandpremium chipsweigh20gramseach)
10,000chips
Production: Standard 6800chips
9700at$110perchip
Premium 6200at$190perchip

Sales: Standard

Premium

Thecostofpurchasing400kgsofdirectmaterialsandprocessingituptothesplit-offpointtoyieldatotal
of16,800chipsofgoodproductswas$1,950,000.Beginninginventoriestotalled140chipsforStandard
and90chipsforPremium.Endinginventoryamountsreflected140chipsofStandardand90chipsof
Premium.OctobercostsperunitwerethesameasNovember.Whenusingaphysical-volumemeasure,
whatistheapproximateamountofjointcoststhatwillbeallocatedStandardchips?(Roundintermediary
percentagestothenearesthundredth.)
A)$1,226,415
B)$1,189,623
C)$975,000
D)$1,160,640
Answer:D
Explanation:
Standard:10,000/(10,000+6800)=59.52%
JointcostsallocatedtoStandardchips=$1,950,000×59.52% =$1,160,640
Diff:3
Objective:3
AACSB:Applicationofknowledge

24
Copyright © 2018 Pearson Education, Ltd.

Downloaded by Aurora Putri Jehova ([email protected])

lOMoARcPSD|14818675

26)NetzoneCompanyisinsemiconductorindustryandfabricationofsilicon-waferchipssplitsofftwo
typesofmemorychips,StandardandPremium.Thefollowinginformationwascollectedforlastquarter
ofthecalendaryear:

Directmaterialsprocessed: 300kgs(Bothstandardandpremium chipsweigh10gramseach)
12,000chips
Production: Standard 6800chips
11,600at$190perchip
Premium 6300at$240perchip

Sales: Standard

Premium

Thecostofpurchasing300kgsofdirectmaterialsandprocessingituptothesplit-offpointtoyieldatotal
of18,800chipsofgoodproductswas$2,030,000.Beginninginventoriestotalled150chipsforStandard
and80chipsforPremium.Endinginventoryamountsreflected150chipsofStandardand80chipsof
Premium.OctobercostsperunitwerethesameasNovember.Whenusingaphysical-volumemeasure,
whatistheapproximateamountofjointcoststhatwillbeallocatedPremium chips?(Roundintermediary
percentagestothenearesthundredth.)
A)$734,251
B)$714,469
C)$1,015,000
D)$669,106
Answer:A
Explanation:
Premium:6800/(12,000+6800)=36.17%
JointcostsallocatedtoPremium chips=$2,030,000×36.17%=$734,251
Diff:3
Objective:3
AACSB:Applicationofknowledge

25
Copyright © 2018 Pearson Education, Ltd.

Downloaded by Aurora Putri Jehova ([email protected])

lOMoARcPSD|14818675

27)TheGreenCompanyprocessesunprocessedgoatmilkuptothesplit-offpointwheretwoproducts,
condensedgoatmilkandskim goatmilkresult.Thefollowinginformationwascollectedforthemonthof
October:

DirectMaterialsprocessed: 100,500gallons(aftershrinkage)
Production:
Condensedgoatmilk 42,500gallons
Sales:
Skim goatmilk 58,000gallons

Condensedgoatmilk $4.00pergallon

Skim goatmilk $3.50pergallon

Thecostsofpurchasingtheofunprocessedgoatmilkandprocessingituptothesplit-offpointtoyielda
totalof100,500gallonsofsaleableproductwas$191,480.Therewerenoinventorybalancesofeither
product.Condensedgoatmilkmaybeprocessedfurthertoyield42,000gallons(theremainderis
shrinkage)ofamedicinalmilkproduct,Xyla,foranadditionalprocessingcostof$6perusablegallon.
Xylacanbesoldfor$21pergallon.

Skim goatmilkcanbeprocessedfurthertoyield56,700gallonsofskim goaticecream,foranadditional
processingcostperusablegallonof$6.Theproductcanbesoldfor$14pergallon.
Therearenobeginningandendinginventorybalances.

WhatistheestimatednetrealizablevalueofXylaatthesplit-offpoint?

A)$453,600

B)$464,000

C)$630,000

D)$637,500

Answer:C

Explanation:

Xyla

Sales 42,000×$21=$882,000

Less:cost 42,000×$6=$252,000

Est.NRValue $630,000

Diff:3
Objective:3
AACSB:Applicationofknowledge

26
Copyright © 2018 Pearson Education, Ltd.

Downloaded by Aurora Putri Jehova ([email protected])

lOMoARcPSD|14818675

28)TheGreenCompanyprocessesunprocessedgoatmilkuptothesplit-offpointwheretwoproducts,
condensedgoatmilkandskim goatmilkresult.Thefollowinginformationwascollectedforthemonthof
October:

DirectMaterialsprocessed: 102,000gallons(aftershrinkage)
Production:
Condensedgoatmilk 42,500gallons
Sales:
Skim goatmilk 59,500gallons

Condensedgoatmilk $3.25pergallon

Skim goatmilk $2.75pergallon

Thecostsofpurchasingtheofunprocessedgoatmilkandprocessingituptothesplit-offpointtoyielda
totalof102,000gallonsofsaleableproductwas$188,480.Therewerenoinventorybalancesofeither
product.Condensedgoatmilkmaybeprocessedfurthertoyield42,000gallons(theremainderis
shrinkage)ofamedicinalmilkproduct,Xyla,foranadditionalprocessingcostof$4perusablegallon.
Xylacanbesoldfor$20pergallon.

Skim goatmilkcanbeprocessedfurthertoyield58,200gallonsofskim goaticecream,foranadditional
processingcostperusablegallonof$4.Theproductcanbesoldfor$12pergallon.
Therearenobeginningandendinginventorybalances.

Whatistheestimatednetrealizablevalueoftheskim goaticecream atthesplit-offpoint?

A)$465,600

B)$476,000

C)$672,000

D)$680,000

Answer:A

Explanation:

IceCream

Sales 58,200×$12=$698,400

Less:cost 58,200×$4=$232,800

Est.NRValue $465,600

Diff:3
Objective:3
AACSB:Applicationofknowledge

27
Copyright © 2018 Pearson Education, Ltd.

Downloaded by Aurora Putri Jehova ([email protected])

lOMoARcPSD|14818675

29)TheGreenCompanyprocessesunprocessedgoatmilkuptothesplit-offpointwheretwoproducts,
condensedgoatmilkandskim goatmilkresult.Thefollowinginformationwascollectedforthemonthof
October:

DirectMaterialsprocessed: 104,000gallons(aftershrinkage)
Production:
Condensedgoatmilk 45,500gallons
Sales:
Skim goatmilk 58,500gallons

Condensedgoatmilk $5.00pergallon

Skim goatmilk $4.50pergallon

Thecostsofpurchasingtheofunprocessedgoatmilkandprocessingituptothesplit-offpointtoyielda
totalof104,000gallonsofsaleableproductwas$186,480.Therewerenoinventorybalancesofeither
product.Condensedgoatmilkmaybeprocessedfurthertoyield45,000gallons(theremainderis
shrinkage)ofamedicinalmilkproduct,Xyla,foranadditionalprocessingcostof$4perusablegallon.
Xylacanbesoldfor$19pergallon.

Skim goatmilkcanbeprocessedfurthertoyield57,200gallonsofskim goaticecream,foranadditional
processingcostperusablegallonof$4.Theproductcanbesoldfor$9pergallon.
Therearenobeginningandendinginventorybalances.

Usingestimatednetrealizablevalue,whatamountofthejointcostswouldbeallocatedXylaandtheskim
goaticecream?(Roundintermediarypercentagecalculationstothenearesthundredth.)

A)$675,000and$286,000

B)$130,984and$55,496

C)$93,240and$93,240

D)$86,448and$100,032

Answer:B

Explanation:

Xyla IceCream
57,200×$9=$514,800
Sales 45,000×$19=$855,000 57,200×$4=$228,800
$286,000
Less:cost 45,000×$4=$180,000 29.76%
$186,480×29.76%=
Est.NRValue $675,000 $55,496

Weighting 70.24%

Jtcostsallocated $186,480×70.24% =
$130,984

Diff:3
Objective:3
AACSB:Applicationofknowledge

28
Copyright © 2018 Pearson Education, Ltd.

Downloaded by Aurora Putri Jehova ([email protected])

lOMoARcPSD|14818675

30)TheGreenCompanyprocessesunprocessedgoatmilkuptothesplit-offpointwheretwoproducts,
condensedgoatmilkandskim goatmilkresult.Thefollowinginformationwascollectedforthemonthof
October:

DirectMaterialsprocessed: 102,500gallons(aftershrinkage)
Production:
Condensedgoatmilk 43,000gallons
Sales:
Skim goatmilk 59,500gallons

Condensedgoatmilk $3.75pergallon

Skim goatmilk $2.75pergallon

Thecostsofpurchasingtheofunprocessedgoatmilkandprocessingituptothesplit-offpointtoyielda
totalof102,500gallonsofsaleableproductwas$186,480.Therewerenoinventorybalancesofeither
product.Condensedgoatmilkmaybeprocessedfurthertoyield42,500gallons(theremainderis
shrinkage)ofamedicinalmilkproduct,Xyla,foranadditionalprocessingcostof$3perusablegallon.
Xylacanbesoldfor$21pergallon.

Skim goatmilkcanbeprocessedfurthertoyield58,200gallonsofskim goaticecream,foranadditional
processingcostperusablegallonof$3.Theproductcanbesoldfor$8pergallon.
Therearenobeginningandendinginventorybalances.

Usingthesalesvalueatsplit-offmethod,whatisthegross-marginpercentageforcondensedgoatmilkat
thesplit-offpoint?(Roundintermediarypercentagestothenearesthundredth.)
A)49.63%
B)50.00%
C)42.60%
D)50.37%
Answer:C

Explanation: CondensedGoatMilk Skim GoatMilk

Revenues 43,000×$3.75=$161,250 59,500×$2.75=$163,625
Percentage
$161,250/$324,875= $163,625/$324,875=

0.4963 0.5037

Jointcosts $186,480×.0.4963= $186,480×.0.5037=
$92,558 $93,922

Grossmargin $68,692 $69,703

GM percentage $68,692/$161,250=0.426$69,703/$163,625=0.426

Diff:3
Objective:3
AACSB:Applicationofknowledge

29
Copyright © 2018 Pearson Education, Ltd.

Downloaded by Aurora Putri Jehova ([email protected])

lOMoARcPSD|14818675

31)TheGreenCompanyprocessesunprocessedgoatmilkuptothesplit-offpointwheretwoproducts,
condensedgoatmilkandskim goatmilkresult.Thefollowinginformationwascollectedforthemonthof
October:

DirectMaterialsprocessed: 105,000gallons(aftershrinkage)
Production:
Condensedgoatmilk 45,500gallons
Sales:
Skim goatmilk 59,500gallons

Condensedgoatmilk $4.50pergallon

Skim goatmilk $4.00pergallon

Thecostsofpurchasingtheofunprocessedgoatmilkandprocessingituptothesplit-offpointtoyielda
totalof105,000gallonsofsaleableproductwas$191,480.Therewerenoinventorybalancesofeither
product.Condensedgoatmilkmaybeprocessedfurthertoyield45,000gallons(theremainderis
shrinkage)ofamedicinalmilkproduct,Xyla,foranadditionalprocessingcostof$5perusablegallon.
Xylacanbesoldfor$20pergallon.

Skim goatmilkcanbeprocessedfurthertoyield58,200gallonsofskim goaticecream,foranadditional
processingcostperusablegallonof$5.Theproductcanbesoldfor$12pergallon.
Therearenobeginningandendinginventorybalances.

Usingthesalesvalueatsplit-offmethod,whatisthegross-marginpercentageforskim goatmilkatthe
split-offpoint?(Roundintermediarypercentagestothenearesthundredth.)
A)46.25%
B)50.00%
C)56.75%
D)53.75%
Answer:C
Explanation:Skim goatmilksales=$238,000(59,500x$4.00).Totalsales$442,750.$238,000/$442,750x
$191,480=$102,930.Gross-marginpercentage=($238,000-$102,930)/$238,000=0.5675=56.75%
Diff:3
Objective:3
AACSB:Applicationofknowledge

30
Copyright © 2018 Pearson Education, Ltd.

Downloaded by Aurora Putri Jehova ([email protected])

lOMoARcPSD|14818675

32)TheGreenCompanyprocessesunprocessedgoatmilkuptothesplit-offpointwheretwoproducts,
condensedgoatmilkandskim goatmilkresult.Thefollowinginformationwascollectedforthemonthof
October:

DirectMaterialsprocessed: 102,500gallons(aftershrinkage)
Production:
Condensedgoatmilk 45,000gallons
Sales:
Skim goatmilk 57,500gallons

Condensedgoatmilk $3.50pergallon

Skim goatmilk $3.00pergallon

Thecostsofpurchasingtheofunprocessedgoatmilkandprocessingituptothesplit-offpointtoyielda
totalof102,500gallonsofsaleableproductwas$189,480.Therewerenoinventorybalancesofeither
product.Condensedgoatmilkmaybeprocessedfurthertoyield44,500gallons(theremainderis
shrinkage)ofamedicinalmilkproduct,Xyla,foranadditionalprocessingcostof$6perusablegallon.
Xylacanbesoldfor$22pergallon.

Skim goatmilkcanbeprocessedfurthertoyield56,200gallonsofskim goaticecream,foranadditional
processingcostperusablegallonof$6.Theproductcanbesoldfor$14pergallon.
Therearenobeginningandendinginventorybalances.

Howmuch(ifany)extraincomewouldGreenearnifitproducedandsoldalloftheXylafrom the
condensedgoatmilk?Allocatejointprocessingcostsbaseduponrelativesalesvalueonthesplit-off.(Extra
incomemeansincomeinexcessofwhatGreenwouldhaveearnedfrom sellingcondensedgoatmilk.)
(Roundintermediarypercentagestothenearesthundredth.)
A)$621,566
B)$277,100
C)$554,500
D)$350,554
Answer:C

31
Copyright © 2018 Pearson Education, Ltd.

Downloaded by Aurora Putri Jehova ([email protected])

lOMoARcPSD|14818675

Explanation:

CondensedGoatMilk Skim GoatMilk

Revenues45,000×$3.50=$157,500 57,500×$3.00=$172,500

Percentage $157,500/$330,000= $172,500/$330,000=
0.4773 0.5227

Jointcosts $189,480×.0.4773= $189,480×.0.5227=
$90,434 $99,046

Grossmargin $67,066 $73,454

GM percentage $67,066/$157,500= $73,454/$172,500=
0.4258 0.4258

Xyla IceCream

Revenue 44,500×$22=$979,000 56,200×$14=$786,800

Jointcost (90,434) (99,046)

Processcosts($6×$44,500)=(267,000) ($6×56,200)=(337,200)

Revenue(net) 621,566 350,554

Grossmargin (67,066) (73,454)

Difference $554,500 $277,100

Diff:3

Objective:3

AACSB:Applicationofknowledge

32
Copyright © 2018 Pearson Education, Ltd.

Downloaded by Aurora Putri Jehova ([email protected])

lOMoARcPSD|14818675

33)TheGreenCompanyprocessesunprocessedgoatmilkuptothesplit-offpointwheretwoproducts,
condensedgoatmilkandskim goatmilkresult.Thefollowinginformationwascollectedforthemonthof
October:

DirectMaterialsprocessed: 103,000gallons(aftershrinkage)
Production:
Condensedgoatmilk 45,000gallons
Sales:
Skim goatmilk 58,000gallons

Condensedgoatmilk $3.00pergallon

Skim goatmilk $2.50pergallon

Thecostsofpurchasingtheofunprocessedgoatmilkandprocessingituptothesplit-offpointtoyielda
totalof103,000gallonsofsaleableproductwas$186,480.Therewerenoinventorybalancesofeither
product.Condensedgoatmilkmaybeprocessedfurthertoyield44,500gallons(theremainderis
shrinkage)ofamedicinalmilkproduct,Xyla,foranadditionalprocessingcostof$7perusablegallon.
Xylacanbesoldfor$25pergallon.

Skim goatmilkcanbeprocessedfurthertoyield56,700gallonsofskim goaticecream,foranadditional
processingcostperusablegallonof$7.Theproductcanbesoldfor$12pergallon.
Therearenobeginningandendinginventorybalances.

Howmuch(ifany)extraincomewouldGreenearnifitproducedandsoldskim milkicecream from
goatsratherthangoatskim milk?Allocatejointprocessingcostsbasedupontherelativesalesvalueatthe
split-offpoint.(Roundintermediarypercentagestothenearesthundredth.)
A)$138,500
B)$711,090
C)$666,000
D)$186,930
Answer:A

33
Copyright © 2018 Pearson Education, Ltd.

Downloaded by Aurora Putri Jehova ([email protected])

lOMoARcPSD|14818675

Explanation: CondensedGoatMilk Skim GoatMilk

Revenues 45,000×$3.00=$135,000 58,000×$2.50=$145,000
Percentage
$135,000/$280,000= $145,000/$280,000=

0.4821 0.5179

Jointcosts $186,480×.0.4821= $186,480×.0.5179=
$89,910 $96,570

Grossmargin $45,090 $48,430

GM percentage $45,090/$135,000=0.334$48,430/$145,000=0.334

Xyla IceCream

Revenue 44,500×$25=$1,112,500 56,700×$12=$680,400
Jointcost
Processcosts (89,910) (96,570)
Revenue(net)
Grossmargin ($7×$44,500)=(311,500) ($7×56,700)=(396,900)
Difference
711,090 186,930

(45,090) (48,430)

$666,000 $138,500

Diff:3
Objective:3
AACSB:Applicationofknowledge

34
Copyright © 2018 Pearson Education, Ltd.

Downloaded by Aurora Putri Jehova ([email protected])

lOMoARcPSD|14818675

34)Chem ManufacturingCompanyprocessesdirectmaterialsuptothesplit-offpointwheretwo
products(XandY)areobtainedandsold.Thefollowinginformationwascollectedforthemonthof
November:

Directmaterialsprocessed: 10,200gallons(10,200gallonsyield9500gallonsofgoodproductand700
gallonsofshrinkage)

Production: X 5300gallons
Y 4200gallons

Sales: X 5050at$300pergallon
Y 3950at$80pergallon

Thecostofpurchasing10,200gallonsofdirectmaterialsandprocessingituptothesplit-offpointtoyield
atotalof9500gallonsofgoodproductswas$1,050,000.

Thebeginninginventoriestotaled35gallonsforXand400gallonsforY.Endinginventoryamounts
reflected565gallonsofProductXand1,515,000gallonsofProductY.Octobercostsperunitwerethe
sameasNovember.

Usingthephysical-volumemethod,whatisProductX'sapproximategross-marginpercentage?(Roundall

intermediarycalculationstwodecimalplaces.)

A)63%

B)56%

C)171%

D)68%

Answer:A

Explanation:

Sales(5050×$300) $1,515,000

CostofGoodsSold[(5050)×$585,795*/5300] 558,163

GrossMargin $956,837

*5300/(5300+4200)=0.5579×$1,050,000=$585,795
Gross-marginpercentage$956,837/$1,515,000=0.63rounded
Diff:3
Objective:3
AACSB:Applicationofknowledge

35
Copyright © 2018 Pearson Education, Ltd.

Downloaded by Aurora Putri Jehova ([email protected])

lOMoARcPSD|14818675

35)BeverageDrinkCompanyprocessesdirectmaterialsuptothesplit-offpointwheretwoproducts,A
andB,areobtained.ThefollowinginformationwascollectedforthemonthofJuly:

Directmaterialsprocessed: 3000liters(with15% shrinkage)

Production: A 600liters
B 1950liters

Sales: A $35.00perliter
B $30.00perliter

Thecostofpurchasing3000litersofdirectmaterialsandprocessingituptothesplit-offpointtoyielda
totalof2550litersofgoodproductswas$7500.TherewerenoinventorybalancesofAandB.

ProductAmaybeprocessedfurthertoyield500litersofProductZ5foranadditionalprocessingcostof
$170.ProductZ5issoldfor$25perliter.Therewasnobeginninginventoryandendinginventorywas125
liters.

ProductBmaybeprocessedfurthertoyield1875litersofProductW3foranadditionalprocessingcostof
$325.ProductW3issoldfor$35perliter.Therewasnobeginninginventoryandendinginventorywas25
liters.

IfProductZ5andProductW3areproduced,whataretheexpectedsalesvaluesofproduction,

respectively?

A)$65,625and$12,500

B)$21,000and$58,500

C)$17,500and$46,875

D)$12,500and$65,625

Answer:D

Explanation:Z5 =500liters×$25 =$12,500

W3 =1875liters×$35 =$65,625

Diff:3

Objective:3

AACSB:Applicationofknowledge

36
Copyright © 2018 Pearson Education, Ltd.

Downloaded by Aurora Putri Jehova ([email protected])

lOMoARcPSD|14818675

36)ColaDrinkCompanyprocessesdirectmaterialsuptothesplit-offpointwheretwoproducts,AandB,
areobtained.ThefollowinginformationwascollectedforthemonthofJuly:

Directmaterialsprocessed: 3500liters(with15% shrinkage)

Production: A 2100liters
B 875liters

Sales: A $40.00perliter
B $35.00perliter

Thecostofpurchasing3500litersofdirectmaterialsandprocessingituptothesplit-offpointtoyielda
totalof2975litersofgoodproductswas$7000.TherewerenoinventorybalancesofAandB.

ProductAmaybeprocessedfurthertoyield2000litersofProductZ5foranadditionalprocessingcostof
$160.ProductZ5issoldfor$60.00perliter.Therewasnobeginninginventoryandendinginventorywas
125liters.

ProductBmaybeprocessedfurthertoyield800litersofProductW3foranadditionalprocessingcostof
$290.ProductW3issoldfor$65perliter.Therewasnobeginninginventoryandendinginventorywas25
liters.

WhatisProductZ5'sestimatednetrealizablevalueatthesplit-offpoint?
A)$51,840
B)$83,840
C)$119,840
D)$120,000
Answer:C
Explanation:2000×$60=$120,000;$120,000-$160=$119,840
Diff:3
Objective:3
AACSB:Applicationofknowledge

37)Whichofthefollowingistrueofthephysical-measureapproachofallocatingjointcosts?
A)Costscannotbeallocatedifthemeasurementbasisforeachproductaredifferent.
B)Physicalmeasuresusuallyresultinlesscostsbeingallocatedtotheproductthatweighsthemost.
C)Thephysicalmeasurereflectsaproduct'sabilitytogeneraterevenues.
D)Obtainingcomparablephysicalmeasuresforallproductsisalwaysstraightforward.
Answer:A
Diff:2
Objective:3
AACSB:Analyticalthinking

37
Copyright © 2018 Pearson Education, Ltd.

Downloaded by Aurora Putri Jehova ([email protected])

lOMoARcPSD|14818675

38)TheKentonCompanyprocessesunprocessedmilktoproducetwoproducts,ButterCream and
CondensedMilk.ThefollowinginformationwascollectedforthemonthofJune:
DirectMaterialsprocessed:24,500gallons(aftershrinkage)

Production: ButterCream 12,000 gallons
12,500 gallons
CondensedMilk 11,500 gallons
12,000 gallons
Sales: ButterCream $3.50 pergallon
$7.50 pergallon
CondensedMilk
$14,000
SalesPrice: ButterCream $34,700

CondensedMilk

Separablecostsin

total: ButterCream

CondensedMilk

Thecostofpurchasingtheofunprocessedmilkandprocessingituptothesplit-offpointtoyieldatotalof
24,500gallonsofsaleableproductwas$55,000.

Thecompanyusesconstantgross-marginpercentageNRVmethodtoallocatethejointcostsof

production.Whatistheconstantgross-marginpercentforKenton?

A)64.1%

B)20.4%

C)23.6%

D)62.6%

Answer:C

Explanation:

Total

Totalfinalsalesvalue(12,000×$3.50)+(12,500×

$7.50) $135,750

Totalproductioncosts($55,000+$14,000+$34,700) 103,700

Grossmargin $32,050

Grossmargin% 23.6%

Diff:2
Objective:3
AACSB:Applicationofknowledge

38
Copyright © 2018 Pearson Education, Ltd.

Downloaded by Aurora Putri Jehova ([email protected])

lOMoARcPSD|14818675

39)TheKentonCompanyprocessesunprocessedmilktoproducetwoproducts,ButterCream and
CondensedMilk.ThefollowinginformationwascollectedforthemonthofJune:
DirectMaterialsprocessed: 22,500gallons(aftershrinkage)

Production: ButterCream 12,000 gallons
10,500 gallons
CondensedMilk 11,500 gallons
10,000 gallons
Sales: ButterCream $3.50 pergallon
$9.00 pergallon
CondensedMilk
$15,000
SalesPrice: ButterCream $35,800

CondensedMilk

Separablecostsin

total: ButterCream

CondensedMilk

Thecostofpurchasingtheofunprocessedmilkandprocessingituptothesplit-offpointtoyieldatotalof
22,500gallonsofsaleableproductwas$51,000.

Thecompanyusesconstantgross-marginpercentageNRVmethodtoallocatethejointcostsof
production.WhatistheallocatedjointcostsofCondensedMilk?(Roundintermediarypercentagestothe
nearesthundredth.)
A)$34,678
B)$16,324
C)$15,000
D)$35,800
Answer:A
Explanation:Grossmarginpercentagecalculation:
($136,500-$51,000-$35,800-$15,000)/$136,500=25.42%

Butter Condensed

Cream Milk Total

Finalsalesvalue $42,000 $94,500 $136,500
[email protected]%
Totalproductioncosts 10,676.4 24,021.9 34,700
Separablecosts
Jointcostsallocated 31,323.6 70,478.1 101,801.7

15,000 35,800 50,800

$16,324 $34,678 $51,001.7

Diff:3
Objective:3
AACSB:Applicationofknowledge

39
Copyright © 2018 Pearson Education, Ltd.

Downloaded by Aurora Putri Jehova ([email protected])

lOMoARcPSD|14818675

40)TheKentonCompanyprocessesunprocessedmilktoproducetwoproducts,ButterCream and
CondensedMilk.ThefollowinginformationwascollectedforthemonthofJune:
DirectMaterialsprocessed: 27,500gallons(aftershrinkage)

Production: ButterCream 12,500 gallons
15,000 gallons
CondensedMilk 12,000 gallons
14,500 gallons
Sales: ButterCream $4.50 pergallon
$8.00 pergallon
CondensedMilk
$13,000
SalesPrice: ButterCream $35,600

CondensedMilk

Separablecostsin

total: ButterCream

CondensedMilk

Thecostofpurchasingtheofunprocessedmilkandprocessingituptothesplit-offpointtoyieldatotalof
27,500gallonsofsaleableproductwas$53,000.

Thecompanyusesconstantgross-marginpercentageNRVmethodtoallocatethejointcostsof
production.WhatistheallocatedjointcostsofButterCream?(Roundintermediarypercentagestothe
nearesthundredth.)

A)$33,580
B)$13,000
C)$35,600
D)$19,428
Answer:D

Explanation:Grossmarginpercentagecalculation:
($176,250-$53,000-$35,600-$13,000)/$176,250=42.35%

Butter Condensed

Cream Milk Total

Finalsalesvalue $56,250 $120,000 $176,250
[email protected]%
Totalproductioncosts 23,821.875 50,820 74,650
Separablecosts
Jointcostsallocated 32,428.125 69,180 101,608.125

13,000 35,600 48,600

$19,428 $33,580 $53,008.125

Diff:3
Objective:3
AACSB:Applicationofknowledge

40
Copyright © 2018 Pearson Education, Ltd.

Downloaded by Aurora Putri Jehova ([email protected])

lOMoARcPSD|14818675

41)TheKentonCompanyprocessesunprocessedmilktoproducetwoproducts,ButterCream and
CondensedMilk.ThefollowinginformationwascollectedforthemonthofJune:
DirectMaterialsprocessed: 23,000gallons(aftershrinkage)

Production: ButterCream 7500 gallons
15,500 gallons
CondensedMilk gallons
7000 gallons
Sales: ButterCream 15,000 pergallon
$5.50 pergallon
CondensedMilk $10.00

SalesPrice: ButterCream $15,500
$35,800
CondensedMilk

Separablecostsin

total: ButterCream

CondensedMilk

Thecostofpurchasingtheofunprocessedmilkandprocessingituptothesplit-offpointtoyieldatotalof
23,000gallonsofsaleableproductwas$48,000.

Thecompanyusesconstantgross-marginpercentageNRVmethodtoallocatethejointcostsof
production.WhichofthefollowingstatementsistrueofKenton'sjointcostallocations?
A)ThegrossmarginissameforbothproductsbecauseconstantgrossmarginpercentageNRVmethod
ignoresprofitsearnedbeforethesplit-offpoint.
B)Oneproductcanreceivenegativejointcostsallocationstobringtheotherunprofitableproducttothe
overallaveragegrossmargin.
C)Kentonhaschosentheeasiestmethodforallocatingitsjointcostsofproduction.
D)Thegrossprofitpercentofcondensedmilkislowerthanthegrossprofitofbuttercream.
Answer:B
Diff:3
Objective:3
AACSB:Applicationofknowledge

42)Whichofthemethodsofallocatingjointcostsusuallyisconsideredthesimplesttoimplement?
A)estimatednetrealizablevalue
B)constantgross-marginpercentageNRV
C)salesvalueatsplit-off
D)physicalmeasures
Answer:C
Diff:2
Objective:3
AACSB:Analyticalthinking

43)Whichofthefollowingstatementsistrueofthemethodsforallocatingjointcosts?
A)Underthecause-and-effectcriterion,thephysical-measuremethodishighlydesirable.
B)Byproductsareneverexcludedfrom thedenominatorusedinthephysical-measuremethod.
C)TheNRVmethodisneverusedwhenthesellingpricesofjointproductsvaryfrequently.
D)Thesalesvalueatsplit-offmethodfollowsthebenefits-receivedcriterionofcostallocation.
Answer:D
Diff:2
Objective:3
AACSB:Analyticalthinking

44)TheBritalCompanyprocessesunprocessedmilktoproducetwoproducts,ButterCream and
CondensedMilk.ThefollowinginformationwascollectedforthemonthofJune:

DirectMaterialsprocessed: 29,500gallons

41
Copyright © 2018 Pearson Education, Ltd.

Downloaded by Aurora Putri Jehova ([email protected])

lOMoARcPSD|14818675

Production: ButterCream 14,000 gallons
15,500 gallons
CondensedMilk 13,500 gallons
15,000 gallons
Sales: ButterCream $3.50 pergallon
$6.00 pergallon
CondensedMilk
$13,500
Sales: ButterCream $34,600

CondensedMilk

Separablecostsin

total: ButterCream

CondensedMilk

Thecostsofpurchasingtheofunprocessedmilkandprocessingituptothesplit-offpointtoyieldatotal
of29,500gallonsofsaleableproductwas$49,000.

Thecompanyusesconstantgross-marginpercentageNRVmethodtoallocatethejointcostsof

production.WhatistheconstantgrossmarginpercentforBrital?

A)66%

B)29%

C)32%

D)41%

Answer:C

Explanation:

Total

Totalfinalsalesvalue(14,000×$3.50)+(15,500×

$6.00) $142,000

Totalproductioncosts($49,000+$13,500+$34,600) 97,100

Grossmargin $44,900

Grossmargin% 32

Diff:2
Objective:3
AACSB:Applicationofknowledge

42
Copyright © 2018 Pearson Education, Ltd.

Downloaded by Aurora Putri Jehova ([email protected])

lOMoARcPSD|14818675

45)TheBritalCompanyprocessesunprocessedmilktoproducetwoproducts,ButterCream and
CondensedMilk.ThefollowinginformationwascollectedforthemonthofJune:

DirectMaterialsprocessed:33,000gallons

Production: ButterCream 13,500 gallons
19,500 gallons
CondensedMilk 13,000 gallons
19,000 gallons
Sales: ButterCream $3.50 pergallon
$5.50 pergallon
CondensedMilk
$15,000
Sales: ButterCream $34,600

CondensedMilk

Separablecostsin

total: ButterCream

CondensedMilk

Thecostsofpurchasingtheofunprocessedmilkandprocessingituptothesplit-offpointtoyieldatotal
of33,000gallonsofsaleableproductwas$89,450.

Thecompanyusesconstantgross-marginpercentageNRVmethodtoallocatethejointcostsof

production.WhatistheallocatedjointcostsofButterCream?

A)$34,600

B)$15,000

C)$61,925

D)$27,525

Answer:D

Explanation:

Butter Condensed

Cream Milk Total

Finalsalesvalue $47,250 $107,250 $154,500

Grossmargin@10% 4725 10,725 15,450

Totalproductioncosts 42,525 96,525 139,050

Separablecosts 15,000 34,600 49,600

Jointcostsallocated $27,525 $61,925 $89,450

Diff:3
Objective:3
AACSB:Applicationofknowledge

43
Copyright © 2018 Pearson Education, Ltd.

Downloaded by Aurora Putri Jehova ([email protected])

lOMoARcPSD|14818675

46)TheBritalCompanyprocessesunprocessedmilktoproducetwoproducts,ButterCream and
CondensedMilk.ThefollowinginformationwascollectedforthemonthofJune:

DirectMaterialsprocessed:31,000gallons

Production: ButterCream 13,000 gallons
18,000 gallons
CondensedMilk 12,500 gallons
17,500 gallons
Sales: ButterCream $3.50 pergallon
$9.50 pergallon
CondensedMilk
$14,500
Sales: ButterCream $33,900

CondensedMilk

Separablecostsin

total: ButterCream

CondensedMilk

Thecostsofpurchasingtheofunprocessedmilkandprocessingituptothesplit-offpointtoyieldatotal
of31,000gallonsofsaleableproductwas$146,450.

Thecompanyusesconstantgross-marginpercentageNRVmethodtoallocatethejointcostsof

production.WhatistheallocatedjointcostsofCondensedMilk?

A)$120,000

B)$14,500

C)$33,900

D)$26,450

Answer:A

Explanation:

Butter Condensed

Cream Milk Total

Finalsalesvalue $45,500 $171,000 $216,500

Grossmargin@10% 4550 17,100 21,650

Totalproductioncosts 40,950 153,900 194,850

Separablecosts 14,500 33,900 48,400

Jointcostsallocated $26,450 $120,000 $146,450

Diff:3
Objective:3
AACSB:Applicationofknowledge

44
Copyright © 2018 Pearson Education, Ltd.

Downloaded by Aurora Putri Jehova ([email protected])

lOMoARcPSD|14818675

47)TheBritalCompanyprocessesunprocessedmilktoproducetwoproducts,ButterCream and
CondensedMilk.ThefollowinginformationwascollectedforthemonthofJune:

DirectMaterialsprocessed:33,000gallons

Production: ButterCream 13,000 gallons
20,000 gallons
CondensedMilk 12,500 gallons
19,500 gallons
Sales: ButterCream $2.50 pergallon
$9.00 pergallon
CondensedMilk
$14,500
Sales: ButterCream $36,000

CondensedMilk

Separablecostsin

total: ButterCream

CondensedMilk

Thecostsofpurchasingtheofunprocessedmilkandprocessingituptothesplit-offpointtoyieldatotal
of33,000gallonsofsaleableproductwas$55,000.

Thecompanyusesconstantgross-marginpercentageNRVmethodtoallocatethejointcostsof
production.WhichofthefollowingstatementsistrueofBrital?
A)Thegrossprofitpercentofcondensedmilkislowerthanthegrossprofitofbuttercream.
B)ThegrossmarginissameforbothproductsbecauseconstantgrossmarginpercentageNRVmethod
ignoresprofitsearnedbeforethesplit-offpoint.
C)Thegrossprofitofcondensedmilkislowerthanthegrossprofitofbuttercream.
D)Thegrossmarginisallocatedtothejointproductsinordertodeterminethejoint-costallocations.
Answer:D
Diff:3
Objective:3
AACSB:Applicationofknowledge

45
Copyright © 2018 Pearson Education, Ltd.

Downloaded by Aurora Putri Jehova ([email protected])

lOMoARcPSD|14818675

48)TheBritalCompanyprocessesunprocessedmilktoproducetwoproducts,ButterCream and
CondensedMilk.ThefollowinginformationwascollectedforthemonthofJune:

DirectMaterialsprocessed:28,000gallons

Production: ButterCream 12,000 gallons
16,000 gallons
CondensedMilk 11,500 gallons
15,500 gallons
Sales: ButterCream $4.00 pergallon
$10.00 pergallon
CondensedMilk
$15,000
Sales: ButterCream $35,800

CondensedMilk

Separablecostsin

total: ButterCream

CondensedMilk

Thecostsofpurchasingtheofunprocessedmilkandprocessingituptothesplit-offpointtoyieldatotal
of28,000gallonsofsaleableproductwas$113,100.

Thecompanyusesconstantgross-marginpercentageNRVmethodtoallocatethejointcostsof

production.IfseparablecostsofButterCream was$17,500andconstantgrossmarginwas20%,what

wouldhavebeentheallocatedjointcostsofCondensedMilk?

A)$20,900

B)$34,900

C)$92,200

D)$87,200

Answer:C

Explanation:

Butter Condensed

Cream Milk Total

Finalsalesvalue $48,000 $160,000 $208,000

Grossmargin@20% 9600 32,000 41,600

Totalproductioncosts 38,400 128,000 166,400

Separablecosts 17,500 35,800 53,300

Jointcostsallocated $20,900 $92,200 $113,100

Diff:3
Objective:3
AACSB:Applicationofknowledge

46
Copyright © 2018 Pearson Education, Ltd.

Downloaded by Aurora Putri Jehova ([email protected])

lOMoARcPSD|14818675

49)TheBritalCompanyprocessesunprocessedmilktoproducetwoproducts,ButterCream and
CondensedMilk.ThefollowinginformationwascollectedforthemonthofJune:

DirectMaterialsprocessed:31,500gallons

Production: ButterCream 12,500 gallons
19,000 gallons
CondensedMilk 12,000 gallons
18,500 gallons
Sales: ButterCream $3.50 pergallon
$10.00 pergallon
CondensedMilk
$16,500
Sales: ButterCream $35,600

CondensedMilk

Separablecostsin

total: ButterCream

CondensedMilk

Thecostsofpurchasingtheofunprocessedmilkandprocessingituptothesplit-offpointtoyieldatotal
of31,500gallonsofsaleableproductwas$109,025.

Thecompanyusesconstantgross-marginpercentageNRVmethodtoallocatethejointcostsof

production.IfseparablecostsofButterCream was$19,000andconstantgrossmarginwas30%,what

wouldhavebeenthetotalallocatedjointcostsofproduction?

A)$109,025

B)$35,600

C)$97,400

D)$163,625

Answer:A

Explanation:

Butter Condensed

Cream Milk Total

Finalsalesvalue $43,750 $190,000 $233,750

Grossmargin@30% 13,125 57,000 70,125

Totalproductioncosts 30,625 133,000 163,625

Separablecosts 19,000 35,600 54,600

Jointcostsallocated $11,625 $97,400 $109,025

Diff:3
Objective:3
AACSB:Applicationofknowledge

47
Copyright © 2018 Pearson Education, Ltd.

Downloaded by Aurora Putri Jehova ([email protected])

lOMoARcPSD|14818675

50)Whichofthefollowingisfalseregardingnetrealizablevalue(NRV)?
A)itisbettertouseaproduct'smarketvalueatthesplit-offpointthanitsestimatedNRV
B)theestimatedNRVatthesplit-offpointiscalculatedbytakingthesalesvalueafterfurtherprocessing
anddeductingadditionalprocessingcosts
C)NRVistheestimatedsellingpriceafterprocessingtheproductbeyondthesplit-offpoint.
D)theconstantNRVmethodusesanidenticalgross-marginpercentageforeachproducttoallocatejoint
costs
Answer:C
Diff:2
Objective:3
AACSB:Applicationofknowledge

51)Theconstantgross-marginpercentageNRVmethodofjointcostallocation________.
A)involvesallocatingcostsinsuchawaythatmaintainingthesamegrossmarginpercentageforeach
productthatwasobtainedinprioryears
B)computesgrossmarginbeforeallocatingthecoststotheproducts
C)isthesameastheestimatedNRVmethod
D)isthesameasthesales-valueatsplit-offmethod
Answer:B
Diff:2
Objective:3
AACSB:Analyticalthinking

52)Injointcosting,theconstantgross-marginpercentageNRVmethodisanexampleofallocatingcosts
usingphysicalmeasures.
Answer:FALSE
Explanation:Injointcosting,theconstantgross-marginpercentageNRVmethodisanexampleof
allocatingcostsusingmarketbaseddata.
Diff:1
Objective:3
AACSB:Analyticalthinking

53)Injointcosting,usingphysicalmeasuresatsplit-offtoallocatecostsenablestheaccountanttoobtain
individualproductcostsandgrossmargins.
Answer:FALSE
Explanation:Injointcosting,usingsalesvalueatsplit-offtoallocatecostsenablestheaccountanttoobtain
individualproductcostsandgrossmargins.
Diff:2
Objective:3
AACSB:Analyticalthinking

54)Anadvantageofthephysical-measuremethodisthatobtainingphysicalmeasuresforallproductsis
aneasytask.
Answer:FALSE
Explanation:Forsomeproductssuchasgas,obtainingphysicalmeasuresisdifficult.
Diff:1
Objective:3
AACSB:Analyticalthinking

48
Copyright © 2018 Pearson Education, Ltd.

Downloaded by Aurora Putri Jehova ([email protected])

lOMoARcPSD|14818675

55)Injointcosting,thesalesvalueatsplit-offmethodallocatesjointcostsentirelytojointproductssold
duringtheaccountingperiodonthebasisoftherelativetotalsalesvalueatthesplit-offpoint.
Answer:FALSE
Explanation:Thesalesvalueatsplit-offmethodallocatesjointcoststojointproductsproducedduringthe
accountingperiodonthebasisoftherelativetotalsalesvalueatthesplit-offpoint.
Diff:2
Objective:3
AACSB:Analyticalthinking

56)Injointcosting,thesalesvalueatsplit-offmethodistypicallyusedinpreferencetotheNRVmethod
onlywhennetrealizablevalueforoneormoreproductsatsplit-offdonotexist.
Answer:FALSE
Explanation:Thesalesvalueatsplit-offmethodisthemorepreferredmethod.TheNRVmethodis
typicallyusedinpreferencetothesalesvalueatsplit-offmethodonlywhensellingpricesforoneormore
productsatsplit-offdonotexist.
Diff:2
Objective:3
AACSB:Analyticalthinking

57)Thenetrealizablevalue(NRV)methodallocatesjointcoststojointproductsproducedduringthe
accountingperiodonthebasisoftheirrelativeNRV—finalsalesvalueplusseparablecosts.
Answer:FALSE
Explanation:Thenetrealizablevalue(NRV)methodallocatesjointcoststojointproductsproduced
duringtheaccountingperiodonthebasisoftheirrelativeNRV—finalsalesvalueminusseparablecosts.
Diff:2
Objective:3
AACSB:Analyticalthinking

58)Injointcosting,thephysicalmeasuresaregenerallyusedforproductsorservicesthatareprocessed
and,aftersplit-off,additionalvalueisaddedtotheproductandasellingpricecanbedetermined.
Answer:FALSE
Explanation:Thenetrealizablevaluemethodisgenerallyusedforproductsorservicesthatareprocessed
and,aftersplit-off,additionalvalueisaddedtotheproductandasellingpricecanbedetermined.
Diff:2
Objective:2
AACSB:Analyticalthinking

59)Thenetrealizablevalue(NRV)methodmethodallocatesjointcoststojointproductsproducedduring
theaccountingperiodinsuchawaythateachindividualproductachievesanidenticalgross-margin
percentage.
Answer:FALSE
Explanation:Theconstantgross-marginpercentageNRVmethodallocatesjointcoststojointproducts
producedduringtheaccountingperiodinsuchawaythateachindividualproductachievesanidentical
gross-marginpercentage.
Diff:2
Objective:3
AACSB:Analyticalthinking

49
Copyright © 2018 Pearson Education, Ltd.

Downloaded by Aurora Putri Jehova ([email protected])