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HGT Corporation produces four products from a common production process. Selected data from HGT's accounting system for the four products appears below: Joint costs for the accounting period totaled $5,000. Each product line has a different product manager, who is evaluated based on product line profitability. Therefore, each manager is motivated to reduce his / her total product line costs as much as possible. The managers have been given information about potential joint cost allocations using the following three methods: physical output, sales at split-off point, and net realizable value. The managers are comparing the joint cost allocations under each method so that they can give the accountant input about their preferred method(s).
-Which product line would receive the least amount of joint cost under the sales value at the split-off point method?
A) Floor cushions
B) Full-body pillows
C) Sofa cushions and standard pillows
D) None of the above

Question

Use the following information for the next 8 questions.
HGT Corporation produces four products from a common production process. Selected data from HGT's accounting system for the four products appears below:  Joint costs for the accounting period totaled $5,000. Each product line has a different product manager, who is evaluated based on product line profitability. Therefore, each manager is motivated to reduce his / her total product line costs as much as possible. The managers have been given information about potential joint cost allocations using the following three methods: physical output, sales at split-off point, and net realizable value. The managers are comparing the joint cost allocations under each method so that they can give the accountant input about their preferred method(s).
-Which product line would receive the least amount of joint cost under the sales value at the split-off point method?
A) Floor cushions 
B) Full-body pillows 
C) Sofa cushions and standard pillows 
D) None of the above

Quizplus · Accepted Answer

Sofa cushions and standard pillows have the lowest sales value at the split-off point, so they would receive the least amount of joint cost under the sales value at the split-off point method.

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