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Exam 11: Allocation of Joint Costs and Accounting for By-Products

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Question 71

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Industrial Solutions Company Industrial Solutions Company produces three products from the same process that has joint processing costs of $4,100.Products R,S,and T are produced in the following quantities: 250 gallons,400 gallons,and 750 gallons.Industrial Solutions Company also incurred advertising costs of $60,000.The ad was used to run sales for all three products.The three products occupy floor space in the following ratio: 5:4:9.(Round all answers to the nearest dollar. ) Refer to Industrial Solutions Company.Assume that Industrial Solutions chooses to allocate its advertising cost among the three products.What amount of advertising cost is allocated to Product T using the floor space ratio?

A) $911
B) $14,244
C) $13,333
D) $30,000

E) All of the above
F) B) and C)

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Question 72

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Chambers Company Chambers Company produces two products from a joint process: X and Z.Joint processing costs for this production cycle are $8,000.

	Yards	Sales price per yard at split-off	Disposal cost per yard at split-off	Further processing per yard	Final sale price per yard
X	1,500	$6.00	$3.50	$1.00	$ 7.50
Y	2,200	9.00	5.00	3.00	11.25

If X and Z are processed further,no disposal costs will be incurred or such costs will be borne by the buyer. Refer to Chambers Company.Using sales value at split-off,what amount of joint processing cost is allocated to Product Z (round to the nearest dollar) ?

A) $5,500
B) $4,000
C) $2,500
D) $4,757

E) All of the above
F) A) and C)

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Question 73

Multiple Choice

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Incremental revenues and costs need to be considered when using which allocation method? $\text {\underline{Physical measures} }$             $\text {\underline{ Sales value at split-of} }$

Under the realized value approach,no value is recognized for by-products or scrap until they are actually sold.

Riley Company Riley Company produces two products from a joint process: A and C.Joint processing costs for this production cycle are $9,000.

	Yards	Sales price per yard at split-off	Disposal cost per yard at split-off	Further processing per yard	Final sale price per yard
A	1,800	$7.00	$4.50	$1.50	$ 8.00
C	2,600	10.00	6.00	3.50	12.25

If A and C are processed further,no disposal costs will be incurred or such costs will be borne by the buyer. Refer to Riley Company.Using approximated net realizable value at split-off,what amount of joint processing cost is allocated to Product C (round to the nearest dollar) ?

Briefly discuss the four decisions that management must make concerning joint processes.

Not-for-profit entities are required to allocate joint costs among fund-raising,program,and administrative functions.

Shiny Floors Company Shiny Floors Company produces four floor cleaners from the same process: C,D,E,and G.Joint product costs are $9,000.(Round all answers to the nearest dollar. )

	Barrels	Sales price per barrel at split-off	Disposal cost per barrel at split-off	Further processing costs	Final sales price per barrel
C	750	$10.00	$6.50	$2.00	$13.50
D	1,000	8.00	4.00	2.50	10.00
E	1,400	11.00	7.00	4.00	15.50
G	2,000	15.00	9.50	4.50	19.50

If Shiny Floors sells the products after further processing,the following disposal costs will be incurred: C,$2.50;D,$1.00;E,$3.50;G,$6.00. Refer to Shiny Floors Company.Using a physical measurement method,what amount of joint processing cost is allocated to Product D?

Incremental separate costs are defined as all costs incurred between ____ and the point of sale.

The relative sales value method requires a common physical unit for measuring the output of each product.

A single process in which one product cannot be manufactured without producing others is referred to as a __________.

If incremental revenues beyond split-off exceed incremental costs,a product should be processed further.

Three monetary measures used to allocate joint costs to products are ____________,________,and ______

Net realizable value is considered to be the best measure of the expected contribution of each product to the coverage of joint costs.

In joint-product costing and analysis,which of the following costs is relevant in the decision when a product should be sold to maximize profits?

Two methods of allocating joint costs to individual products are ___________ and _______________.