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COST ACCOUNTING 13 EDITION HORNGREN (CHAPTER 16 QUIZ AND EXERCISES) CHAPTER 16 COST ALLOCATION JOINT PRODUCTS AND BY PRODUCTS (INSTANT DOWNLOAD)

COST ACCOUNTING 13 EDITION HORNGREN (CHAPTER 16 QUIZ AND EXERCISES) CHAPTER 16 COST ALLOCATION JOINT PRODUCTS AND BY PRODUCTS (INSTANT DOWNLOAD)
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Solution Guide / Answer Key:

Accounting

Cost Accounting 13/e

Horngren, Foster, Datar, Rajan & Ittner

 

CHAPTER 16 QUIZ

 

The following data apply to questions 1–5.

 

      Brant Corporation manufactures two products out of a joint process—Scout and Andro.  The joint (common) costs incurred are $400,000 for a standard production run that generates 70,000 pounds of Scout and 30,000 pounds of Andro.  Scout sells for $9.00 per pound while Andro sells for $7.00 per pound.

 

1.       [CMA Adapted]  If there are no additional processing costs incurred after the splitoff point, the amount of joint cost of each production run allocated to Scout on a physical-quantity basis is

 

a.   $300,000.                      b.   $280,000.                c.   $120,000.                d.   $100,000.

 

2.       [CMA Adapted]  If there are no additional processing costs incurred after the splitoff point, the amount of joint cost of each production run allocated to Andro on a sales value at splitoff basis is

 

a.   $300,000.                      b.   $225,000.                c.   $175,000.                d.   $100,000.

 

3.       [CMA Adapted]  If additional processing costs beyond the splitoff point are $1.00 per pound for Scout and $2.33 per pound for Andro, the amount of joint cost of each production run allocated to Andro on a physical quantity basis is

 

      a.   $300,000.                      b.   $280,000.                c.   $120,000.                d.   $100,000.

 

4.       [CMA Adapted]  If additional processing costs beyond the splitoff point are $1.00 per pound for Scout and $2.33 per pound for Andro, the amount of joint cost of each production run allocated to Andro on an estimated net realizable value basis is

 

a.   $80,000.                        b.   $147,350.                c.   $175,000.                d.   $320,000.

 

5.       Assume the same cost information as in question 4.  The amount of joint cost of each production run allocated to Scout using the constant gross-margin percentage NRV method is

 

a.   $224,910.                      b.   $260,120.                c.   $335,090.                d.   $405,090.

 

6.       [CPA Adapted]  For purposes of allocating joint costs to joint products, the sales value at splitoff method could be used in which of the following situations?

 

                        No costs beyond splitoff             Cost beyond splitoff

      a.                           Yes                                          No

      b.                           Yes                                          Yes

      c.                           No                                            Yes

      d.                           No                                            No


7.       Products G and H are joint products developed from the same process with each being processed further.  Joint costs are incurred until splitoff, the separable costs are incurred in further refining each product.  Sales values of G and H at splitoff are used to allocate joint costs.  If the sales value of G at splitoff increases and all other costs and selling prices remain unchanged, the gross margin of

 

                              G                      H              

      a.               increases          increases

      b.               increases          decreases

      c.               decreases         decreases

      d.               decreases         increases

 

8.       [CPA Adapted]  Tanner Company manufactures products Katran and Klare from a joint process.  Product Katran has been allocated $7,500 of total joint costs of  $30,000 for the 1,500 units produced.  Katran can be sold at the splitoff point for $4 per unit, or it can be processed further with additional costs of $2,000 and sold for $7 per unit.   If Katran is processed further and sold, the result would be

 

a.       a break-even situation.

b.       an overall loss of $1,500.

c.       a gain of $2,500 from further processing.

d.       a gain of $1,000 from further processing.

 

9.       [CPA Adapted]  In accounting for byproducts, the value of the byproduct may be recognized at the time of

 

                        Production        Sale

      a.                                 Yes                        No

      b.                     Yes                        Yes

      c.                                 No              No

      d.                     No              Yes                       

 

10.   [CPA Adapted]  Mohler Corporation manufactures a product that yields the byproduct, Jep.  The only costs associated with Jep are selling costs of $0.10 for each unit sold.  Mohler accounts for sales of Jep by deducting Jep’s separable costs from Jep’s sales and then deducting this net amount from the major product’s cost of goods sold.  Jep’s sales were 200,000 units at $1.00 each.  If  Mohler changes its method of accounting for Jep’s sales of showing the net amount as additional sales revenue, the Mohler’s gross margin would

 

a.       increase by $180,000.

b.       increase by $200,000.

c.       increase by $220,000.

d.       be unaffected.

 

                       


WRITING/DISCUSSION EXERCISES

 

1.      Identify the splitoff point in a joint-cost situation

 

Discuss the interesting situation of having products that come from a common production process begin the cost assignment process with the allocation of indirect costs rather than a cost assignment process that begins with direct costs and then adds the indirect costs.  


2.      Distinguish joint products from byproducts

 

Why is the distinction between joint products and byproducts considered changeable?

 

3.      Explain why joint costs should be allocated to individual products

 

Can some companies choose to avoid allocating joint costs?  

 

 

4.      Allocate joint costs using four different methods

 

Does it make a difference which method of joint cost allocation is used?  

 

5.      Explain why the sales value at splitoff method is preferred when allocating joint costs

 

Why does the benefits-received criterion work so well for the sales value at splitoff method of allocating joint costs?   

 

 

6.      Explain why joint costs are irrelevant in a sell-or-process-further decision

 

If a manager had only one income statement to use to make the decision to drop a product, would that manager make the same decision about which product to drop, all other factors kept constant and equal, if the information was from Exhibits 16-4, 5, 7, or 9?


7.      Account for byproducts using two different methods

 

Discuss the concept of materiality, especially as it pertains to accounting for byproducts.  Should a company adopt guidelines for defining materiality for income statement items?

 

 


FILE: MS WORD

 

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