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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
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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
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74.Industries that recognize income on each product when production is completedinclude:dDifficulty:2Objective:4Terms to Learn:byproducts
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75.Why do accountants criticize the practice of carrying inventories at estimated netrealizable values?cDifficulty:2Objective:4Terms to Learn:net-realizable value [NRV] method
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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