Which of the following is a disadvantage of the physical-measure method of allocating joint costs?
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Cancel anytime. Chapter 11--Allocation of Joint Costs and Accounting for By-Products TRUE/FALSE 1.Joint costs occur after the split-off point in a production process ANS:F 2.Joint costs occur before the split-off point in a production process ANS:T 3.Joint costs are allocated to by-products as well as primary products. ANS:F 4.The primary distinction between by-products and scrap is the difference in sales value. ANS:T 5.The primary distinction between by-products and scrap is the difference in volume produced. ANS:F 6.The point at which individual products are first identifiable in a joint process is referred to as the split- off point ANS:T 7.Joint costs include all materials, labor and overhead that are incurred before the split-off point. ANS:T 8.Two methods of allocating joint costs to products are physical measure allocation and monetary allocation. ANS:T 9. A decision that must be made at split-off is to sell a product or process it further. ANS:T 10.Allocating joint costs based upon a physical measure ignores the revenue-generating ability of individual products. ANS:T 11.Allocating joint costs based upon a physical measure considers the revenue-generating ability of individual products. ANS:F Recommended textbook solutions
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Intermediate Accounting16th EditionDonald E. Kieso, Jerry J. Weygandt, Terry D. Warfield 2,307 solutions 73.Which of the methods of allocating joint costs usually is considered the simplest toimplement?cDifficulty:2Objective:4Terms to Learn:joint costs, sales value at splitoff method Get answer to your question and much more 74.Industries that recognize income on each product when production is completedinclude:dDifficulty:2Objective:4Terms to Learn:byproducts Get answer to your question and much more 75.Why do accountants criticize the practice of carrying inventories at estimated netrealizable values?cDifficulty:2Objective:4Terms to Learn:net-realizable value (NRV) method Get answer to your question and much more 76.The constant gross-margin percentage NRV method of joint cost allocation:a.involves allocating costs in such a way that maintaining the same grossmargin percentage for each product that was obtained in prior yearsbinvolves allocating costs in such a way that the overall gross marginpercentage is identical for the individual productsc.is the same as the estimated NRV methodd.is the same as the sales-value at splitoff methodAnswer:bDifficulty:2Objective:4Terms to Learn:byproducts Which method of accounting for by products allocates a portion of joint costs to the by product?The constant gross-margin percentage NRV method allocates joint costs to joint products produced during the accounting period in such a way that each individual product achieves an identical gross-margin percentage.
Which of the following is an advantage of the net realizable value method?NRV method is superior to the physical measure method because it produces an allocation that yields a predictable, comparable level of profitability among products.
What is the typical approach to allocating joint product costs to products?Two methods are commonly used to allocate these joint costs to the joint products: the physical quantities method and the sales value method.
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