acycst2 joint products and byproducts

1. It is a process in which one input yields multiple outputs.

A. Joint process.

B. Business process. 

C. Production process.

D. Accounting process.

A

2. 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. joint product point.

E. split-off point.

E

3. Which of the following is/are the outputs of a joint process?

A. Joint products.

B. By-products.

C. Both A and B.

D. Neither A nor B.

C

4. These are the primary or main outputs of a joint process.

A. Joint products.

B. By-products.

C. A and B.

D. Neither A nor B.

A

5. These are incidental outputs of a joint process.

A. Joint products.

B. By-products.

C. A and B.

D. Neither A nor B.

B

6. These are costs incurred in a joint process.

A. Joint cost.

B. Manufacturing cost.

C. Product cost.

D. Period cost.

A

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

I. Direct materials

II. Direct labor

III. Manufacturing overhead

A. I and II only.

B. I and III only.

C. II and III only.

D. I, II, and III.

D

8. Which of the following statements about joint cost allocation is/are true?

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 can be based on the number of units produced.

D. Joint cost allocation can be accomplished by using several different methods that focus on sales value.

E. Choices B, C, and D.

E

9. Consider the following statements about joint cost allocation:

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

II. Joint 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 are correct?

A. I and II.

B. I and III.

C. II and III.

D. I, II, and III.

B

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.

A

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

A. Sales value method.

B. Net realizable value method.

C. Physical units method.

D. Hypothetical market value method.

A

12. This method requires that all joint products be salable at split- off and considers the costs that must be incurred at split-off to realize the estimated sales value.

A. Sales value method.

B. Net realizable value method.

C. Physical units method.

D. Hypothetical market value method.

B

13. 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. Reciprocal accounting method.

B. Sales value method.

C. Physical units method.

D. Net realizable value method.

B

14. 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.

D

15. This method of allocating joint cost may be used if not all the joint products are salable at split-off.

A. Sales value method.

B. Net realizable value method.

C. Physical units method.

D. Hypothetical market value method.

D

16. Approximated net realizable value 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.

B

17. King 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.

D

18. 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.

B

19. 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.

D

20. Which of the following statements is/are correct with regard to accounting for by-products?

A. By-products can be accounted for using either the net realizable value method or realized value method.

B. The specific method that will be used to account for by- product must be determined before the joint cost is allocated to the joint products.

C. No joint cost shall be allocated to the by-products.

D. All of these are correct.

D

21. The net realizable value approach mandates that the NRV of the by-products be treated as:

A. a sunk cost.

B. a cost that can be ignored totally.

C. an increase in joint costs.

D. a reduction of joint costs.

D

22. The net realizable value (NRV) approach is normally used when the NRV of the by-product is expected to be:

A. Significant.

B. Insignificant.

C. Both A and B.

D. Neither A nor B.

A

23. The method of pricing by-products where no value is assigned to until they are sold is known as the:

A. sales value at split-off method. B. net realizable value point method.

C. approximated net realizable value at split-off method.

D. realized value approach.

D

24. Under the realizable value method, the net sales value of the by-product can be presented as:

A. Additional sales revenue.

B. A reduction from cost of goods sold.

C. A reduction from cost of goods manufactured.

D. Other income.

E. Any of the foregoing.

E

25. Which of the following statements are correct with regard to accounting for by-products?

I. Under the net realizable value method, by-products are recognized when produced.

II. Under the net realizable value method, by-products are recognized when sold.

III. Under the realized value method, by-products are recognized when produced.

IV. Under the realized value method, by-products are recognized when sold.

A. I and IV.

B. II and III.

C. I and II.

D. II and IV.

A