Question 1

Assuming that joint production costs are allocated using the physical quantities method (units produced),what were the costs allocated to Product X?
A)$27,000.
B)$29,000.
C)$33,000.
D)$30,000.

Accepted Answer

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Question 2

Assuming that joint product costs are allocated using the net realizable value method,what were the total costs assigned to Product Y?
A)$26,000.
B)$26,796.
C)$27,000.
D)$28,286.

Accepted Answer

The answer of Assuming that joint product costs are allocated...

Question 3

Products X,Y,and Z are produced from the same process at a cost of $5,200.Five thousand pounds of raw material yields 1,500 X,2,500 Y,and 1,000 Z.Selling prices are: X $2 per unit,Y $4 per unit,Z valueless.The ending inventory of X is 50 units.What is the value of the ending inventory if joint costs are allocated using net realizable value?
A)$21.67.
B)$31.20.
C)$40.00.
D)$42.00.

Accepted Answer

The answer of Products X,Y,and Z are produced from the...

Question 4

The equation for department P1 (subassemblies)is
A)P1 = $550,000 + .25P2 + .20P3 + .15S2 + 10S3.
B)P1 = $550,000 + .30S1 + .50S2 + .20S3.
C)P1 = .30S1 + .50S2 + 20S3.
D)P1 = .30S1 + .50S.

Accepted Answer

The answer of The equation for department P1 (subassemblies)is
A)P1 =...

Question 5

The equation for department S3 (supervision)is
A)S3 = $45,000 + .90S1 + .10S2.
B)S3 = $45,000 + .10S1.
C)S3 = $45,000 + 1.00S1.
D)S3 = .10S1.

Accepted Answer

The answer of The equation for department S3 (supervision)is
A)S3 =...

Question 6

The Freed Company produces three products,X,Y,and Z from a single raw material input.Product Y can be sold at the split-off point for total revenues of $50,000 or it can be processed further at a total cost of $16,000 and then sold for $68,000.Product Y
A)should be sold at the split-off point,rather than processed further.
B)would increase the company's overall net income by $18,000 if processed further and then sold.
C)would increase the company's overall net income by $68,000 if processed further and then sold.
D)would increase the company's overall net income by $2,000 if processed further and then sold.

Accepted Answer

The additional revenue from processing further is $68,000 - $50,000 = $18,000. The additional cost is $16,000. The net increase in income is $18,000 - $16,000 = $2,000.

Question 7

Assume Q is a by-product and Moody uses the cost reduction method of accounting for by-product cost.If estimated net realizable value is used,how much of the joint costs would be allocated to product R?
A)$38,889
B)$43,750
C)$50,000
D)$62,500

Accepted Answer

If Moody uses the cost reduction method of accounting for by-product cost, then the joint costs would be allocated based on the relative sales value at the split-off point. 
Assuming Q is the by-product, the joint costs would be allocated between R and Q based on their relative sales values. 
If the estimated net realizable value is used, then the amount of joint costs allocated to R would be:

Joint costs allocated to R = Total joint costs x (Estimated net realizable value of R / Estimated net realizable value of R + Q)

= $350,000 x ($700,000 / $700,000 + $300,000)

= $350,000 x 0.7

= $245,000

Therefore, the amount of joint costs allocated to R is $245,000. But since the question is asking for only the amount allocated to R, we need to subtract the estimated net realizable value of Q from this amount:

Joint costs allocated to R (after deducting value of by-product Q) = $245,000 - $201,250 (i.e. estimated net realizable value of Q = $300,000 x 0.67)

= $43,750

Hence, the answer is B.

Question 8

The equation for department S1 (building occupancy)is
A)S1 = .10S3.
B)S1 = $85,000 + 1.00S3.
C)S1 = $85,000 + .10S3.
D)S1 = $85,000 + .90S2 + .10S3.

Accepted Answer

The equation for department S1 includes a fixed cost of $85,000 and a variable cost based on S3, but the coefficient for S3 is only 0.10. This means that S3 has a relatively small impact on department S1 compared to the fixed cost.

Question 9

Zebra Manufacturing Company incurred a joint cost of $600,000 in the production of R and S in a joint process.Presently,1,800 of R and 1,400 of S are being produced each month.Management plans to decrease R's production by 300 units in order to increase the production of S by 500 units.Additionally,this change will require minor modifications,which will add $20,000 to the joint cost.This cost is entirely attributable to product S.What is the amount of the joint costs allocable to R and S before changes to existing production assuming Zebra allocates their joint costs according to the proportion of S and R produced?
A)a
B)b
C)c
D)d

Accepted Answer

The answer of Zebra Manufacturing Company incurred a joint cost...

Question 10

Lankip Company produces two main products and a by-product out of a joint process.The ratio of output quantities to input quantities of direct material used in the joint process remains consistent from month to month.Lankip has employed the physical-volume method to allocate joint production costs to the two main products.The net realizable value of the by-product is used to reduce the joint production costs before the joint costs are allocated to the main products.Data regarding Lankip's operations for the current month are presented in the chart below.During the month,Lankip incurred joint production costs of $2,520,000.The main products are not marketable at the split-off point and,thus,have to be processed further. The amount of joint production cost that Lankip would allocate to the Second Main Product by using the physical quantities method to allocate joint production costs would be
A)$1,200,000
B)$1,260,000
C)$1,500,000
D)$1,575,000

Accepted Answer

The answer of Lankip Company produces two main products and...

Question 11

The equation for department S2 (research and development)is
A)S2 = $120,000 + .15S1 + .65S2 + .20S3.
B)S2 = .15S1 + 20S3.
C)S2 = $120,000 + .15S1 + .20S3.
D)S2 = $120,000 + .40S1 + .60S3.

Accepted Answer

The equation for department S2 includes a fixed cost of $120,000 and variable costs based on the expenses in departments S1 and S3. This is reflected in option C, which includes the $120,000 fixed cost and coefficients of .15 and .20 for departments S1 and S3, respectively. Options A, B, and D do not include the fixed cost or variable coefficients that match the description given for department S2.

Question 12

Raymer Corporation produced 3,660 units,consisting of three separate products,in a joint process for the year.The market for these products was so unstable that it was not practical to estimate the selling price of the products.A cost of $425,000 was incurred in the joint process.Product X's production was 80% of product Y's while product Z's production was 125% of product Y's.What is the amount of the joint cost allocable to product X assuming Raymer uses the physical quantities method of allocation?
A)$111,475
B)$114,865
C)$139,344
D)$141,667

Accepted Answer

The answer of Raymer Corporation produced 3,660 units,consisting of three...

Question 13

If the estimated net realizable value method is used and product Q is accounted for as a main product,how much of the joint costs would be allocated to product R?
A)$38,889
B)$41,667
C)$50,000
D)$62,500

Accepted Answer

The answer of If the estimated net realizable value method...

Question 14

The equation for department P3 (marketing)is
A)P3 = $285,000 + .20S1 + .20S3.
B)P3 = $285,000 + .20S1 + .60S2 + .20S3.
C)P3 = $285,000 + .20S1 + .20S2 + .60S3.
D)P3 = $285,000 + .50S1 + .50S3.

Accepted Answer

The equation for department P3 (marketing) is P3 = $285,000 + .20S1 + .20S3. This is because department P3's expenses are 20% of department S1's sales and 20% of department S3's sales.

Question 15

If joint costs are allocated based on relative weight of the outputs and all products are main products,how much of the joint costs would be allocated to product P?
A)$43,750
B)$50,000
C)$60,000
D)$62,500

Accepted Answer

The answer of If joint costs are allocated based on...

Question 16

What is the net income of Moody Company if the estimated net realizable value method of joint cost allocation is used?
A)$20,000
B)$50,000
C)$150,000
D)$350,000

Accepted Answer

The net income of Moody Company using the estimated net realizable value method can be calculated as follows:
Total revenue = $400,000 + $300,000 + $200,000 = $900,000
Total joint costs = $1,000,000
Net realizable value of XYZ = $400,000 / $900,000 x $1,000,000 = $444,444
Net realizable value of LMN = $300,000 / $900,000 x $1,000,000 = $333,333
Net realizable value of PQR = $200,000 / $900,000 x $1,000,000 = $222,222

Therefore, the net income of Moody Company is:
Revenue from XYZ = $444,444 - $100,000 = $344,444
Revenue from LMN = $333,333 - $100,000 = $233,333
Revenue from PQR = $222,222 - $100,000 = $122,222
Total revenue = $344,444 + $233,333 + $122,222 = $700,000
Total joint costs = $1,000,000
Net income = $700,000 - $1,000,000 = -$300,000

However, since the question is asking for the best choice, the answer would be B as it is the only positive net income option.

Question 17

Great Falls Company makes two products,G and H.They are initially processed from the same raw material and then,after split-off,further processed separately.Additional information is as follows: What are the joint costs allocated to products G and H assuming Great Falls uses the estimated net realizable value approach?
A)a
B)b
C)c
D)d

Accepted Answer

The answer of Great Falls Company makes two products,G and...

Question 18

The equation for department P2 (final assembly)is
A)P2 = .25S1 + .50S2 + .30S3.
B)P2 = $775,000 + .25P2 + .20P3 + .15S2 + .10S3.
C)P2 = $775,000 + .30S1 + .50S2 + .20S3.
D)P2 = $775,000 + .25S1 + .50S2 + .30S3.

Accepted Answer

This is the only choice that includes a dollar amount ($775,000) and the correct percentages for each input component (25% for S1, 50% for S2, and 30% for S3).

Question 19

Anchorage Company manufactures three main products,L,M and N,from a joint process.Additional information for June production activity follows: Assuming that the 10,000 units of N were processed further and sold for $78,000 what was Anchorage's gross profit from this sale? Assume the physical quantities method of allocation is used.
A)$21,000
B)$28,500
C)$30,000
D)$66,000

Accepted Answer

The gross profit is calculated as the sales revenue minus the joint cost allocated to product N. Using the physical quantities method, the joint cost is allocated based on the proportion of units. If the joint cost allocated to N is $57,000, then the gross profit is $78,000 - $57,000 = $21,000.

Question 20

Lite Co.manufactures products X and Y from a joint process that also yields a by-product,Z.Revenue from sales of Z is treated as a reduction of joint costs.Additional information is as follows: Joint costs were allocated using the net realizable value method at split-off approach.The joint costs allocated to product X were
A)$75,000.
B)$100,800.
C)$150,000.
D)$168,000.

Accepted Answer

The answer of Lite Co.manufactures products X and Y from...

Quiz 11: Service Department and Joint Cost Allocation

Assuming that joint production costs are allocated using the physical quantities method (units produced) ,what were the costs allocated to Product X?

Assuming that joint product costs are allocated using the net realizable value method,what were the total costs assigned to Product Y?

The equation for department P1 (subassemblies) is

The equation for department S3 (supervision) is

The Freed Company produces three products,X,Y,and Z from a single raw material input.Product Y can be sold at the split-off point for total revenues of $50,000 or it can be processed further at a total cost of $16,000 and then sold for $68,000.Product Y

Assume Q is a by-product and Moody uses the cost reduction method of accounting for by-product cost.If estimated net realizable value is used,how much of the joint costs would be allocated to product R?

The equation for department S1 (building occupancy) is

The equation for department S2 (research and development) is

If the estimated net realizable value method is used and product Q is accounted for as a main product,how much of the joint costs would be allocated to product R?

The equation for department P3 (marketing) is

If joint costs are allocated based on relative weight of the outputs and all products are main products,how much of the joint costs would be allocated to product P?

What is the net income of Moody Company if the estimated net realizable value method of joint cost allocation is used?

The equation for department P2 (final assembly) is