ALLOCATION OF JOINT COST AND ACCOUNTING FOR BY PRODUCTS

True/False
FALSE 1. Joint costs occur after the split-off point in a production process.

TRUE 2. Joint costs occur before the split-off point in a production process.

FALSE 3. Joint costs are allocated to by-products as well as primary products

TRUE 4. The primary distinction between by-products and scrap is the difference in sales value.

FALSE 5. The primary distinction between by-products and scrap is the difference in volume produced.

TRUE 6. The point at which individual products are first identifiable in a joint process is referred to as the
split-off point

TRUE 7. Joint costs include all materials, labor and overhead that are incurred before the split-off point.

TRUE 8. Two methods of allocating joint costs to products are physical measure allocation and monetary
allocation.

TRUE 9. A decision that must be made at split-off is to sell a product or process it further.

TRUE 10. Allocating joint costs based upon a physical measure ignores the revenue-generating ability of
individual products.

FALSE 11. Allocating joint costs based upon a physical measure considers the revenue-generating ability
of individual products.

TRUE 12. Monetary allocation measures recognize the revenue generating ability of each product in a
joint process.

FALSE 13. The relative sales value method requires a common physical unit for measuring the output of
each product.

TRUE 14. Joint costs are allocated to main products, but not to by-products

FALSE 15. Net realizable value equals product sales revenue at split-off plus any costs necessary to
prepare and dispose of the product.

TRUE 16. Net realizable value equals product sales revenue at split-off minus any costs necessary to
prepare and dispose of the product.

TRUE 17. If incremental revenues beyond split-off are less than incremental costs, a product should be
sold at the split-off point.
TRUE 18. If incremental revenues beyond split-off exceed incremental costs, a product should be
processed further.

TRUE 19. The net realizable value approach requires that the net realizable value of by-products and scrap
be treated as a reduction in joint costs allocated to primary products.

TRUE 20. Net realizable value is considered to be the best measure of the expected contribution of each
product to the coverage of joint costs.

FALSE 21. The net realizable value approach is used to account for scrap and by-products when the net
realizable value is insignificant.

TRUE 22. The net realizable value approach is used to account for scrap and by-products when the net
realizable value is significant.

TRUE 23. Under the realized value approach, no value is recognized for by-products or scrap until they are
actually sold.

FALSE 24. Under the net realizable value approach, no value is recognized for by-products or scrap until
they are actually sold.

TRUE 25. Not-for-profit entities are required to allocate joint costs among fund-raising, program, and
administrative functions.

MULTIPLE CHOICE - THEORY

1. If a company obtains two salable products from the refining of one ore, the refining process should be
accounted for as a(n)

a. mixed cost process.

b. joint process.
c. extractive process.
d. reduction process.

2. Joint costs are allocated to joint products to

a. obtain a cost per unit for financial statement purposes.

b. provide accurate management information on production costs of each type of product.
c. compute variances from expected costs for each joint product.
d. allow the use of high-low analysis by the company.

3. Joint costs are allocated to which of the following products?

By-products Scrap
a. Yes yes
b. Yes no
c. no no
d. no yes

4. Joint cost allocation is useful for

a. decision making.
b. product costing.
c. control.
d. evaluating managers' performance.

5. Joint costs are useful for

a. setting the selling price of a product.

b. determining whether to continue producing an item.
c. evaluating management by means of a responsibility reporting system.
d. determining inventory cost for accounting purposes.

6. Which of the following components of production are allocable as joint costs when a single
manufacturing process produces several salable products?

a. direct material, direct labor, and overhead

b. direct material and direct labor only
c. direct labor and overhead only
d. overhead and direct material only

7. Each of the following is a method to allocate joint costs except

a. relative sales value.

b. relative net realizable value.
c. relative weight, volume, or linear measure.
d. average unit cost.

8. Joint costs are most frequently allocated based upon relative

a. profitability.
b. conversion costs.
c. prime costs.
d. sales value.

9. When allocating joint process cost based on tons of output, products will all

a. be salable at split-off.
b. have the same joint cost per ton.
c. have a sales value greater than their costs.
d. have no disposal costs at the split-off point

10. If two or more products share a common process before they are separated, the joint costs should
be assigned in a manner that

a. assigns a proportionate amount of the total cost to each product on a quantitative basis.
b. maximizes total earnings.
c. minimizes variations in unit production costs.
d. does not introduce an element of estimation into the process of accumulating costs for
each product.

11. Scrap is defined as a

a. finished unit of product that has no sales value.

b. residual of the production process that has limited sales value.
c. residual of the production process that can be reworked for sale as an irregular unit of
product.
d. residual of the production process that has no sales value.

12. Waste created by a production process is

a. accounted for in the same manner as defective units.

b. accounted for as an abnormal loss.
c. material that can be sold as an irregular product.
d. discarded rather than sold.

13. While preparing a salad, you remove the core of a head of lettuce. This core would be classified as

a. defective.
b. shrinkage.
c. waste.
d. Scrap.

14. Which of the following is/are synonyms for joint products?

Main products Co-products

a. no no
b. Yes yes
c. yes no
d. No yes

15. In a lumber mill, which of the following would most likely be considered a primary product?

a. 2 x 4 studs
b. sawdust
c. wood chips
d. tree bark
16. Fisher Company produces three products from a joint process. The products can be sold at split-off
or processed further. In deciding whether to sell at split-off or process further, management should

a. allocate the joint cost to the products based on relative sales value prior to making the decision.
b. allocate the joint cost to the products based on a physical quantity measure prior to making the
decision.
c. subtract the joint cost from the total sales value of the products before determining relative sales value
and making the decision.
d. ignore the joint cost in making the decision.

17. By-products are

a. allocated a portion of joint production cost.

b. not sufficient alone, in terms of sales value, for management to justify undertaking the joint process.
c. also known as scrap.
d. the primary reason management undertook the production process.

18. Which of the following statements is true regarding by-products or scrap?

a. Process costing is the only method that should result in by-products or scrap.
b. Job order costing systems will never have by-products or scrap.
c. Job order costing systems may have instances where by-products or scrap result from the production
process.
d. Process costing will never have by-products or scrap from the production process.

19. Which of the following has sales value?

By-products Waste
a. no no
b. yes no
c. yes yes
d. No yes

20. Under an acceptable method of costing by-products, inventory costs of the by-product are based on
the portion of the joint production cost allocated to the by-product

a. but any subsequent processing cost is debited to the cost of the main product.
b. but any subsequent processing cost is debited to revenue of the main product.
c. plus any subsequent processing cost.
d. minus any subsequent processing cost

21. Which of the following is a false statement about scrap and by-products?

a. Both by-products and scrap are salable.

b. A by-product has a higher sales value than does scrap.
c. By-products and scrap are the primary reason that management undertakes the joint process.
d. Both scrap and by-products are incidental outputs to the joint process.
22. The split-off point is the point at which

a. output is first identifiable as individual products.

b. joint costs are allocated to joint products.
c. some products may first be sold.
d. all of the above.

23. A product may be processed beyond the split-off point if management believes that

a. its marketability will be enhanced.

b. the incremental cost of further processing will be less than the incremental revenue of further
processing.
c. the joint cost assigned to it is not already greater than its prospective selling price.
d. both a and b.

24. Which of the following would not be considered a sunk cost?

a. direct material cost

b. direct labor cost
c. joint cost
d. building cost

25. The definition of a sunk cost is

a. a cost that cannot be recovered regardless of what happens.

b. a cost that relates to money poured into the ground.
c. considered the original cost of an item.
d. also known as an opportunity cost.

26. The net realizable value approach mandates that the NRV of the by-products/scrap be treated as

a. an increase in joint costs.

b. a sunk cost.
c. a reduction of joint costs.
d. a cost that can be ignored totally

27. The net realizable value approach is normally used when the NRV is expected to be

Insignificant significant
a. yes yes
b. no yes
c. no no
d. Yes no

28. Approximated net realizable value at split-off for joint products is computed as
a. selling price at split-off minus further processing and disposal costs.
b. final selling price minus further processing and disposal costs.
c. selling price at split-off minus allocated joint processing costs.
d. final selling price minus a normal profit margin.

29. Which of the following is a commonly used joint cost allocation method?

a. high-low method
b. regression analysis
c. approximated sales value at split-off method
d. weighted average quantity technique

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

a. inception
b. split-off point
c. transfer to finished goods inventory
d. point of addition of disposal costs

31. All costs that are incurred between the split-off point and the point of sale are known as

a. sunk costs.
b. incremental separate costs.
c. joint cost.
d. committed costs.

32. Incremental revenues and costs need to be considered when using which allocation method?

Physical measures Sales value at split-off

a. yes yes
b. Yes no
c. no no
d. No yes

33. The method of pricing by-products/scrap where no value is assigned to these items until they are
sold is known as the

a. net realizable value at split-off point method.

b. sales value at split-off method.
c. realized value approach.
d. approximated net realizable value at split-off method.

34. Relative sales value at split-off is used to allocate

costs beyond split-off joint costs

a. Yes yes
b. yes no
c. no yes
d. No no

35. For purposes of allocating joint costs to joint products using the relative sales value at split-off
method, the costs beyond split-off

a. are allocated in the same manner as the joint costs.

b. are deducted from the relative sales value at split-off.
c. are deducted from the sales value at the point of sale.
d. do not affect the allocation of the joint costs.

36. Not-for-profit organizations are required by the _______ to allocate joint costs.

a. AICPA
b. FASB
c. CASB
d. GASB

37. 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?

a. Separable costs after the split-off point

b. Joint costs to the split-off point
c. Sales salaries for the production period
d. Costs of raw materials purchased for the joint process.

38. The point in a joint production process where each individual product becomes separately
identifiable is commonly called the:

A. decision point.
B. separation point.
C. individual product point.
D. split-off point.
E. joint product point.

39. The joint-cost allocation method that recognizes the revenues at split-off but does not consider any
further processing costs is the:

A. relative-sales-value method.
B. net-realizable-value method.
C. physical-units method.
D. reciprocal-accounting method.
E. gross margin at split-off method.
40. Which of the following methods should be selected if a company terminates all processing
at the split-off point and desires to use a cost-allocation approach that considers the
"revenue-producing ability" of each product?

A. Gross margin at split-off method.

B. Reciprocal-accounting method.
C. Relative-sales-value method.
D. Physical-units method.
E. Net-realizable-value method.

41.

42. When allocating joint costs, Wolstein calculates the final sales value of the various products
manufactured and subtracts appropriate separable costs. The company is using the:

A. gross margin at split-off method.

B. reciprocal-accounting method.
C. relative-sales-value method.
D. physical-units method.
E. net-realizable-value method.

43. Which of the following statements about joint-cost allocation is false?

A. Joint-cost allocation is useful in deciding whether to further process a product after split-off.
B. Joint-cost allocation is useful in making a profit determination about individual joint products.
C. Joint-cost allocation is helpful in inventory valuation.
D. Joint-cost allocation can be based on the number of units produced.
E. Joint-cost allocation can be accomplished by using several different methods that focus on sales value
and product "worth."

44. Consider the following statements about joint product cost allocation:

I. Joint product cost is allocated because it is necessary for inventory valuation.

II. Joint product cost is allocated because it is necessary for making economic decisions
about individual products (e.g., sell at split-off or process further).
III. Joint cost may be allocated to products by using several different methods.
Which of the above statements is (are) correct?

A. I only.
B. III only.
C. I and II.
D. I and III.
E. I, II, and III.

45. Eastside Hospital has two service departments (Patient Records and Accounting) and two
"production" departments (Internal Medicine and Surgery). Which of the following allocations would
likely take place under the reciprocal-services method of cost allocation?

A. Allocation of Accounting cost to Patient Records.

B. Allocation of Patient Records cost to Internal Medicine.
C. Allocation of Surgery cost to Accounting.
D. Allocation of Internal Medicine cost to Surgery.
E. Allocations "A" and "B" above.

46. Westside Hospital has two service departments (Patient Records and Accounting) and two
"production" departments (Internal Medicine and Surgery). Which of the following allocations would not
take place under the reciprocal-services method of cost allocation?

A. Allocation of Accounting cost to Patient Records.

B. Allocation of Patient Records cost to Internal Medicine.
C. Allocation of Surgery cost to Accounting.
D. Allocation of Internal Medicine cost to Surgery.
E. Allocations "C" and "D" above.

47. If a company obtains two salable products from the refining of one ore, the refining process should
be accounted for as a(n)

a. mixed cost process.

b. joint process.
c. extractive process.
d. reduction process.

48. Joint costs are allocated to joint products to

a. obtain a cost per unit for financial statement purposes.

b. provide accurate management information on production costs of each type of product.
c. compute variances from expected costs for each joint product.
d. allow the use of high-low analysis by the company.

49. Joint costs are allocated to which of the following products?

By-products Scrap
a. Yes yes
b. Yes no
c. no no
d. No yes

50. Joint cost allocation is useful for

a. decision making.
b. product costing.
c. control.
d. evaluating managers' performance.

51. Joint costs are useful for

a. setting the selling price of a product.

b. determining whether to continue producing an item.
c. evaluating management by means of a responsibility reporting system.
d. determining inventory cost for accounting purposes.

52. Which of the following components of production are allocable as joint costs when a single
manufacturing process produces several salable products?

a. direct material, direct labor, and overhead

b. direct material and direct labor only
c. direct labor and overhead only
d. overhead and direct material only

53. Each of the following is a method to allocate joint costs except

a. relative sales value.

b. relative net realizable value.
c. relative weight, volume, or linear measure.
d. average unit cost.

54. Joint costs are most frequently allocated based upon relative

a. profitability.
b. conversion costs.
c. prime costs.
d. sales value

55. When allocating joint process cost based on tons of output, all products will

a. be salable at split-off.
b. have the same joint cost per ton.
c. have a sales value greater than their costs.
d. have no disposal costs at the split-off point.
56. If two or more products share a common process before they are separated, the joint costs should
be assigned in a manner that

a. assigns a proportionate amount of the total cost to each product on a quantitative basis.
b. maximizes total earnings.
c. minimizes variations in unit production costs.
d. does not introduce an element of estimation into the process of accumulating costs for each product.

57. Scrap is defined as a

a. finished unit of product that has no sales value.

b. residual of the production process that has limited sales value.
c. residual of the production process that can be reworked for sale as an irregular unit of product.
d. residual of the production process that has no sales value.

58. Waste created by a production process is

a. accounted for in the same manner as defective units.

b. accounted for as an abnormal loss.
c. material that can be sold as an irregular product.
d. discarded rather than sold.

59. While preparing a salad, you remove the core of a head of lettuce. This core would be classified as

a. defective.
b. shrinkage.
c. waste.
d. Scrap.

60. By-products are

a. allocated a portion of joint production cost.

b. not sufficient alone, in terms of sales value, for management to justify undertaking the joint process.
c. also known as scrap.
d. the primary reason management undertook the production process.

61. The allocation of joint costs to individual products is useful primarily for purposes of:

A. determining whether to produce one of the joint products

B. inventory costing
C. determining the best market price
D. deciding whether to sell at the split-off point
E. evaluating whether an output is a main product or a by-product
62. The method used for the allocation of joint costs to products is important:

A. only in the minds of accountants

B. because profits will be affected when ending inventories change from the beginning of the period
C. because its validity for justifying prices before regulatory authorities is unquestioned
D. because profit margins differ when the relative sales value method is used
E. for income determination when inventories are nonexistent

63. In a joint production process, a by-product is also described as:

A. a simultaneously produced product of relatively low value

B. a form of main product with controllable production proportions
C. waste
D. products of low value recovered at the end of a production process
E. a product with no value contribution to help offset production costs

64. All of the following are methods of costing by-products except the:

A. market value method

B. recognition of net revenue method
C. recognition of gross revenue method
D. average unit cost method
E. replacement cost method

65. Reporting revenue from by-product sales on the income statement as additional sales revenue:

A. allocates costs to by-products on the basis of quantities produced

B. reduces the main product cost by the estimated market value of the by-product
C. credits main product costs only when the by-product is used in further production
D. allocates a proper share of production costs to the by-product
E. overstates ending inventory costs of the main product

66. All of the following are methods of allocating joint production costs except the:

A. market value method

B. quantitative unit method
C. average unit cost method
D. average cost method
E. recognition of net revenue method

67. Costs to be incurred after the split-off point are most useful for:

A. adjusting inequities in the joint cost allocation procedure

B. determining the levels of joint production
C. assessing the desirability of further processing
D. setting the mix of output products
E. assessing sales realization values for allocating joint costs accurately
68. If a company obtains two salable products from the refining of one ore, the refining process should
be accounted for as a(n):

A. reduction process
B. depletion process
C. mixed cost process
D. joint process
E. extractive process

69. The assignment of raw material costs to the major end products resulting from refining a barrel of
crude oil is best described as:

A. joint costing
B. differential costing
C. incremental costing
D. variable costing
E. indirect costing

70. The following components of production that can be allocated as joint costs when a single
manufacturing process produces several salable products are:

A. indirect production costs only

B. materials, labor, and overhead
C. materials and labor only
D. labor and overhead only
E. overhead and materials only

71. The following statement that best describes a by-product is:

A. a product that usually produces a small amount of revenue when compared to the main product's
revenue
B. a product that does not bear any portion of the joint processing costs
C. a product that is produced from material that would otherwise be scrap
D. a product that has a lower unit selling price than the main product
E. a product created along with the main product whose sales value does not cover its cost
of production

72.
73.

74. A company manufactures two joint products at a joint cost of $1,000. These products can be sold at
split-off, or when further processed at an additional cost, sold as higher quality items. The decision to
sell at split-off or further process should be based on the:

A. allocation of the $1,000 joint cost using the quantitative unit measure
B. assumption that the $1,000 joint cost is irrelevant
C. allocation of the $1,000 joint cost using the relative sales value approach
D. assumption that the $1,000 joint cost must be allocated using a physical-measure approach
E. allocation of the $1,000 joint cost using any equitable and rational allocation basis

75. The characteristic that is most often used to distinguish a product as either a joint product or a
by-product is the:

A. amount of labor used in processing the product

B. amount of separable product costs that are incurred in processing
C. amount (i.e., weight, inches, etc.) of the product produced in the manufacturing process
D. relative sales value of the products produced in the process
E. none of the above

76. A company produces three main joint products and one by-product. The by-product's relative market
value is quite low compared to that of the main products. The preferable accounting for the by-product's
net realizable value is as:

A. an addition to the revenues of the other products allocated on their respective net realizable values
B. revenue in the period in which it is sold
C. a reduction in the joint cost to be allocated to the three main products
D. a separate net realizable value upon which to allocate some of the joint costs
E. none of the above

77. The two standards in the Standards of Ethical Conduct for Management Accountants that pertain
most specifically to consideration of joint costs allocation are:

A. competence and confidentiality

B. confidentiality and integrity
C. competence and integrity
D. confidentiality and objectivity
E. none of the above
MULTIPLE CHOICE - COMPUTATIONAL

37. Refer to Ratcliff Company. Using a physical measure, what amount of joint processing cost is
allocated to X (round to the nearest dollar)?

a. $4,000
b. $4,757
c. $5,500
d. $3,243

● SOLUTION CALCULATION: 1,500/3,700 *8,000 = $3,243

38. Refer to Ratcliff Company. Using a physical measure, what amount of joint processing cost is
allocated to Z (round to the nearest dollar)?

a. $4,000
b. $3,243
c. $5,500
d. $4,757

● SOLUTION CALCULATION: 2,200/3,700 *8,000 = $4,757

39. Refer to Ratcliff Company. Using sales value at split-off, what amount of joint processing cost is
allocated to X (round to the nearest dollar)?

a. $5,500
b. $2,500
c. $4,000
d. $3,243
40. Refer to Ratcliff Company. Using sales value at split-off, what amount of joint processing cost is
allocated to Z (round to the nearest dollar)?

a. $5,500
b. $4,000
c. $2,500
d. $4,757

41. Refer to Ratcliff Company. Using net realizable value at split-off, what amount of joint processing
cost is allocated to X (round to the nearest dollar)?

a. $4,000
b. $5,610
c. $2,390
d. $5,500

42. Refer to Ratcliff Company. Using net realizable value at split-off, what amount of joint processing
cost is allocated to Z (round to the nearest dollar)?

a. $5,500
b. $4,000
c. $2,390
d. $5,610

43. Refer to Ratcliff Company. Using approximated net realizable value at split-off, what amount of joint
processing cost is allocated to X (round to the nearest dollar)?

a. $3,090
b. $5,204
c. $4,000
d. $2,390

44. Refer to Ratcliff Company. Using approximated net realizable value at split-off, what amount of joint
processing cost is allocated to Z (round to the nearest dollar)?

a. $2,796
b. $4,910
c. $4,000
d. $2,390

45. Refer to Ratcliff Company. Which products would be processed further?

a. only X
b. only Z
c. both X and Z
d. neither X or Z

46. Refer to Gordon Company. Using a physical measurement method, what amount of joint processing
cost is allocated to Product A (round to the nearest dollar)?

a. $700
b. $679
c. $927
d. $494

● SOLUTION CALCULATION: (800/3,400) *2,100 = $494

47. Refer to Gordon Company. Using a physical measurement method, what amount of joint processing
cost is allocated to Product B (round to the nearest dollar)?

a. $494
b. $679
c. $927
d. $700

● SOLUTION CALCULATION: (1,100/3,400) *2,100 = $679

48. Refer to Gordon Company. Using sales value at split-off, what amount of joint processing cost is
allocated to Product B (round to the nearest dollar)?

a. $700
b. $416
c. $725
d. $959

49. Refer to Gordon Company. Using sales value at split-off, what amount of joint processing cost is
allocated to Product C (round to the nearest dollar)?

a. $959
b. $725
c. $700
d. $416

50. Refer to Gordon Company. Using net realizable value at split-off, what amount of joint processing
cost is allocated to Product A (round to the nearest dollar)?

a. $706
b. $951
c. $700
d. $444

51. Refer to Gordon Company. Using net realizable value at split-off, what amount of joint processing
cost is allocated to Product C (round to the nearest dollar)?

a. $706
b. $951
c. $444
d. $700

52. Refer to Sabrina Company. What amount of advertising cost should be allocated to hardware,
assuming Sabrina allocates based on percent of floor space occupied?

a. $1,375
b. $1,100
c. $2,475
d. $ 825

● SOLUTION CALCULATION: $5,500*0.20 = $1,100

53. Refer to Sabrina Company. Assume that Sabrina decides to allocate based on expected sales value.
What amount of advertising cost should be allocated to light fixtures (round to the nearest dollar)?

a. $1,375
b. $589
c. $1,002
d. $2,534

● SOLUTION CALCULATION: ($25,500/140,000)*5,500 = $1,002

54. Refer to Versatile Company. Using a physical measurement method, what amount of joint
processing cost is allocated to Product D?

a. $1,748
b. $2,447
c. $1,311
d. $3,495

● SOLUTION CALCULATION: (1,000/5,150)*9,000 = $1,748

55. Refer to Versatile Company. Using a physical measurement method, what amount of joint
processing cost is allocated to Product E?

a. $3,495
b. $2,447
c. $1,748
d. $1,311

● SOLUTION CALCULATION: (1,400/5,150)*9,000 = $2,447

56. Refer to Versatile Company. Using a physical measurement method, what amount of joint
processing cost is allocated to Product C?

a. $3,495
b. $2,447
c. $1,748
d. $1,311

● SOLUTION CALCULATION: (750/5,150)*9,000 = $1,331

57. Refer to Versatile Company. Using a physical measurement method, what amount of joint
processing cost is allocated to Product G?

a. $3,495
b. $2,447
c. $1,748
d. $1,311

● SOLUTION CALCULATION: (2,000/5,150)*9,000 = $3,495

58. Refer to Versatile Company. Using sales value at split-off, what amount of joint processing cost is
allocated to Product D?

a. $4,433
b. $2,276
c. $1,108
d. $1,182

59. Refer to Versatile Company. Using sales value at split-off, what amount of joint processing cost is
allocated to Product C?

a. $4,433
b. $2,276
c. $1,108
d. $1,182

60. Refer to Versatile Company. Using sales value at split-off, what amount of joint processing cost is
allocated to Product G?

a. $4,433
b. $1,182
c. $1,108
d. $2,276
61. Refer to Versatile Company. Using sales value at split-off, what amount of joint processing cost is
allocated to Product E?

a. $4,433
b. $1,182
c. $1,108
d. $2,276

62. Refer to Versatile Company. Using net realizable value at split-off, what amount of joint processing
cost is allocated to Product C?

a. $1,550
b. $1,017
c. $4,263
d. $2,170

63. Refer to Versatile Company. Using net realizable value at split-off, what amount of joint processing
cost is allocated to Product D?

a. $1,550
b. $1,017
c. $4,263
d. $2,170
64. Refer to Versatile Company. Using net realizable value at split-off, what amount of joint processing
cost is allocated to Product E?

a. $1,017
b. $1,550
c. $2,170
d. $4,263

65. Refer to Versatile Company. Using net realizable value at split-off, what amount of joint processing
cost is allocated to Product G?

a. $1,017
b. $1,550
c. $2,170
d. $4,263

66. Refer to Uniflo Company. Using gallons as the physical measurement, what amount of joint
processing cost is allocated to Product R?

a. $2,196
b. $1,171
c. $1,367
d. $ 732

● SOLUTION CALCULATION: (250/1,400)*4,100 = $732

67. Refer to Uniflo Company. Using gallons as the physical measurement, what amount of joint
processing cost is allocated to Product S?

a. $2,196
b. $1,171
c. $1,367
d. $ 732

● SOLUTION CALCULATION: (400/1,400)*4,100 = $1,171

68. Refer to Uniflo Company. Using gallons as the physical measurement, what amount of joint
processing cost is allocated to Product T?

a. $2,196
b. $732
c. $1,367
d. $1,171

● SOLUTION CALCULATION: (750/1,400)*4,100 = $2.169

69. Refer to Uniflo Company. Assume that Uniflo chooses to allocate its advertising cost among the
three products. What amount of advertising cost is allocated to Product R using the floor space ratio?

a. $30,000
b. $17,806
c. $1,139
d. $16,667

● SOLUTION CALCULATION: (60,000*5/18) = $16,667

70. Refer to Uniflo Company. Assume that Uniflo chooses to allocate its advertising cost among the
three products. What amount of advertising cost is allocated to Product S using the floor space ratio?

a. $911
b. $14,244
c. $13,333
d. $30,000

● SOLUTION CALCULATION: 60,000*4/18 = $13,333

71. Refer to Uniflo Company. Assume that Uniflo 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

● SOLUTION CALCULATION: 60,000*9/18 = $30,000

72. Courtney Company manufactures products A and B from a joint process. Sales value at split-off was
$700,000 for 10,000 units of A, and $300,000 for 15,000 units of B. Using the sales value at split-off
approach, joint costs properly allocated to A were $140,000. Total joint costs were

a. $ 98,000.
b. $200,000.
c. $233,333.
d. $350,000.

● SOLUTION CALCULATION:
(700,000/1,000,000)*X = $140,000
.70X = 140,000
X = 200,000

73. Refer to Whalen Company. The joint costs allocated to product X were

a. $ 84,000
b. $100,800.
c. $150,000.
d. $168,000.

● SOLUTION CALCULATION:
262,000 * (300,000/450,000) = 174,667
10,000 * (300,000/450,000) = 6,667
(174,667 - 6,667) = 168,000
74. Refer to Whalen Company. The joint costs allocated to product Y were

a. $ 84,000
b. $100,800.
c. $150,000.
d. $168,000.

● SOLUTION CALCULATION:
262,000 * (150,000/450,000) = 87,333
10,000 * (150,000/450,000) = 3,333
(87,333 - 3,333) = 84,000

76. Refer to Tropical Company. If Product A is processed beyond the split-off point, profit will:

a. increase by $210,000
b. increase by $120,000
c. increase by $ 90,000
d. remain unchanged

● SOLUTION CALCULATION:
Increase in value 9 per unit
Separable processing costs 9 per unit
No increase in profit

77. Refer to Tropical Company. To maximize profits, which products should Tropical process further?

a. Product A only
b. Product B only
c. Product C only
d. Products A, B, and C
78. Idaho Corporation manufactures liquid chemicals A and B from a joint process. Joint costs are
allocated on the basis of relative market value at split-off. It costs $4,560 to process 500
gallons of Product A and 1,000 gallons of Product B to the split-off point. The market value at
split-off is $10 per gallon for Product A and $14 for Product B. Product B requires an additional
process beyond split-off at a cost of $2 per gallon before it can be sold. What is Idaho's cost to
produce 1,000 gallons of Product B?

A. $5,040
B. $4,360
C. $4,860
D. $5,360
E. $3,360

79.
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82.
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84.

84.
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