cost accounting test bank chapter

1、Cost Accounting, 15e (Horngren/Datar/Rajan)Chapter 16 Cost Allocation: Joint Products and ByproductsObjective 16.11) What type of cost is the result of an event that results in more than one product or service simultaneously? A) byproduct cost B) joint cost C) main cost D) separable cost Answer: BDi

2、ff: 1Objective: 1AACSB: Analytical thinking2) Which of the following statements best define splitoff point in joint costing?A) It is the point at which managers decide to discontinue one or more of the products.B) It is the point at which the managers decide to outsource some of its production proce

3、sses.C) It is the juncture in a joint production process when two or more products become separately identifiable. D) It is the juncture at which decisions determining joint costs of various products to be produced are taken.Answer: CDiff: 2Objective: 1AACSB: Analytical thinking3) Which of the follo

4、wing statements is true of joint production process and its components?A) Distribution costs incurred beyond the splitoff point assignable to each of the specific products identified at the splitoff point are considered as joint costs.B) Decisions relating to the sale or further processing of each i

5、dentifiable product can be made independently of decisions about the other products beyond the splitoff point. C) When a joint production process yields two or more products with low total sales values relative to the total sales values of other products, those products are called joint products.D)

6、The primary purpose of joint costing is to allocate the separable costs to the individual products that are eventually sold.Answer: BDiff: 2Objective: 1AACSB: Analytical thinking4) The focus of joint costing is on allocating costs to individual products _.A) before the splitoff pointB) after the spl

7、itoff pointC) at the splitoff pointD) at the end of productionAnswer: CDiff: 1Objective: 1AACSB: Analytical thinking5) Which of the following statements is true of joint costing?A) The costs of a production process that yields multiple products simultaneously are called joint costs.B) Distribution c

8、osts incurred beyond the splitoff point that are assignable to each of the specific products identified at the splitoff point are considered as joint costs.C) The primary purpose of joint costing is to allocate the separable costs to the individual products that are eventually sold.D) Joint costing

9、is less useful for companies which manufacture multiple products simultaneously from the same production process.Answer: ADiff: 2Objective: 1AACSB: Application of knowledge6) When a single manufacturing process yields two products, one of which has a relatively high sales value compared to the other

10、, the two products are respectively known as _. A) joint products and byproducts B) joint products and scrap C) main products and byproducts D) main products and joint products Answer: CDiff: 1Objective: 1AACSB: Analytical thinking7) Which of the following statements best define joint products?A) Wh

11、en one product has a high total sales value compared with the total sales value of other products of the process, that product is called a joint product.B) Product of a joint production process that have the same sales value compared with the total sales value of the by products is called a joint pr

12、oduct.C) When one product has a low total sales value compared with the total sales value of other products of the process, that product is called a joint product.D) When a joint production process yields two or more products with high total sales values relative to the total sales values of other p

13、roducts, those products are called joint products.Answer: DDiff: 2Objective: 1AACSB: Analytical thinking8) The products of a joint production process that have low total sales values compared with the total sales value of the main product are called _.A) primary productsB) joint productsC) byproduct

14、sD) waste productsAnswer: CDiff: 1Objective: 1AACSB: Analytical thinking9) _ is the differentiating factor while classifying a product as a main product or byproduct.A) Number of units per processing period B) Weight or volume of outputs per period C) Percentage of total sales valueD) Joint costs in

15、curred up to the splitoff pointAnswer: CDiff: 2Objective: 1AACSB: Application of knowledge10) In joint costing, which of the following changes may lead to a change in product classification?A) main product sales price increases due to a new applicationB) byproduct sales price decreases due to a new

16、government regulationC) main product becomes technologically obsoleteD) byproduct loses its market due to a new inventionAnswer: CDiff: 2Objective: 1AACSB: Analytical thinking11) Products with a relatively low sales value are known as _. A) primary products B) main products C) joint products D) bypr

17、oducts Answer: DDiff: 1Objective: 1AACSB: Analytical thinking12) Which of the following statements is true of main products and byproducts? A) A byproduct will never become a main product. B) A main product will never become a byproduct. C) Product classifications may change over time. D) Product cl

18、assifications remains constant over time. Answer: CDiff: 2Objective: 1AACSB: Analytical thinking13) Outputs with a negative sales value are _.A) added to cost of goods soldB) added to joint production costs and allocated to joint or main productsC) added to joint production costs and allocated to by

19、products and scrapD) subtracted from product revenueAnswer: BDiff: 3Objective: 1AACSB: Analytical thinking14) Joint costs are incurred beyond the splitoff point and are assignable to individual products. Answer: FALSEExplanation: Joint costs are incurred prior to the splitoff point.Diff: 1Objective:

20、 1AACSB: Analytical thinking15) Joint costing allocates the joint costs to the individual products that are eventually sold.Answer: TRUEDiff: 1Objective: 1AACSB: Analytical thinking16) Separable costs include manufacturing costs only.Answer: FALSEExplanation: Separable costs include manufacturing, m

21、arketing, distribution, and other costs.Diff: 2Objective: 1AACSB: Analytical thinking17) Classification of main products, joint products, and byproducts can always be done with ease.Answer: FALSEExplanation: In practice, distinctions among main products, joint products, and byproducts are not so cle

22、arcut.Diff: 1Objective: 1AACSB: Analytical thinking18) Joint costs are the costs of a production process that yields multiple products simultaneously.Answer: TRUEDiff: 1Objective: 1AACSB: Analytical thinking19) The juncture in a joint production process when two products become separable is the bypr

23、oduct point. Answer: FALSEExplanation: The juncture in a joint production process when two products become separable is the splitoff point.Diff: 1Objective: 1AACSB: Analytical thinking20) Before the splitoff point, decisions relating to the sale or further processing of each identifiable product can

24、not be made independently of decisions about the other products.Answer: TRUEDiff: 2Objective: 1AACSB: Application of knowledge21) When a joint production process yields two or more products with high total sales values, these products are called joint products.Answer: TRUEDiff: 1Objective: 1AACSB: A

25、nalytical thinking22) All products yielded from joint product processing have some positive value to the firm. Answer: FALSEExplanation: Not all products yielded from joint product processing have some positive value to the firm.Diff: 1Objective: 1AACSB: Analytical thinking23) If the value of a bypr

26、oduct drops significantly, it could also be viewed as a joint product.Answer: FALSEExplanation: If the value of a byproduct drops significantly, it will remain as a byproduct only.Diff: 2Objective: 1AACSB: Application of knowledge24) In each of the following industries, identify possible joint (or s

27、everable) products at the splitoff point. a.Coalb.Petroleumc.Dairyd.Lambe.Lumberf.Cocoa Beansg.Christmas Treesh.Salti.Cowhide Answer: a.Coke, Gas, Benzole, Tar, Ammoniab.Crude Oil, Gas, Raw LPGc.Milk, Butter, Cheese, Ice Cream, Skim Milkd.Lamb Cuts, Tripe, Hides, Bones, Fate.Board, Newsprint, Shavin

28、gs, Chips, etc.f.Cocoa Butter, Cocoa Powder, Cocoa Shellsg.Christmas Trees, Wreaths, Decorationsh.Hydrogen, Chlorine, Caustic Sodai.Leather, Suede, Chew Toys Diff: 3Objective: 1AACSB: Analytical thinking25) Define the terms main product, joint product, and byproduct. Give at least one example of eac

29、h type of product.Answer: Main product - When one product has a high total sales value compared with the total sales value of other products of the process. Ex. timber processed into lumberJoint product - When a joint production process yields two or more products with high total sales value compare

30、d with the total sales value of other products. Ex. crude oil processed into gasoline and keroseneByproduct - Products of a joint production process that have low total sales value compared with the total sales value of the main product or joint products. Ex. woodchips created when timber processed

31、into lumberDiff: 2Objective: 1AACSB: Analytical thinking26) Silver Company uses one raw material, silver ore, for all of its products. It spends considerable time getting the silver from the ore before it starts the actual processing of the finished products, rings, lockets, etc. Traditionally, the

32、company made one product at a time and charged the product with all costs of production, from ore to final inspection. However, in recent months, the cost accounting reports have been somewhat disturbing to management. It seems that some of the finished products are costing more than they should, ev

33、en to the point of approaching their retail value. It has been noted by the accounting manager that this problem began when the company started buying ore from different parts of the world, some of which require difficult extraction methods. Required: Can you explain how the company might change its

34、 accounting system to reflect the reporting problems better? Are there other problems with the purchasing area? Answer: It appears that the company needs to start assigning all extraction costs to a joint-cost category. It is unfair that the finished products receive a high cost simply because a cer

35、tain batch of ore was very expensive to run through the extraction process when the next finished products were produced from silver that was easy to extract. If all extraction costs are considered joint, then each finished product would share in the average cost of extraction, rather than being cha

36、rged with the cost of a specific batch. This should result in costs that are more reflective of the products actual cost.Additional problems may be with the purchasing department. The accounting department may help highlight the problem but it does not pinpoint the actual problem. Maybe the company

37、should buy refined silver or else hire experts in the minerals area as part of the purchasing team. Diff: 2Objective: 1AACSB: Application of knowledge27) What are joint costs, separable costs, and a splitoff point? Answer: Joint costs are the costs of a single production process that yield multiple

38、products simultaneously.Separable costs are all costs incurred beyond the splitoff point that are assignable to each of the specific products identified at the splitoff point.The splitoff point is the juncture in a joint production process when the products become separately identifiable. An example

39、 is the point at which coal becomes coke, natural gas, and other products.Diff: 2Objective: 1AACSB: Analytical thinking28) Discuss in brief how easy it is for companies to classify products as main products, joint products, and byproducts.Answer: Distinctions among main products, joint products, and

40、 byproducts are not so clearcut in practice. Companies use different thresholds for determining whether the relative sales value of a product is high enough for it to be considered a joint product. Moreover, the classification of products can change over time, especially for products whose selling p

41、rices change frequently. Diff: 2Objective: 1AACSB: Analytical thinking29) Explain the difference between a joint product and a byproduct. Can a byproduct ever become a joint product? Also, can a joint product ever become a byproduct?Answer: The differentiating factor between a joint product and a by

42、product is the sales value at the splitoff point. Joint products have high total sales value at the splitoff point. A byproduct has a low total sales value at the splitoff point. Products can change from byproducts to joint products when their total sales values increase significantly. Also, product

43、s can change from joint products to by products when their total sales values decrease significantly.Diff: 2Objective: 1AACSB: Analytical thinkingObjective 16.21) Which of the following is a possible reason to allocate joint costs to individual products? A) rate regulation requirements B) to prepare

44、 financial statementsC) for product design decisions D) to determine tax ratesAnswer: ADiff: 1Objective: 2AACSB: Analytical thinking2) A business which enters into a contract to purchase a product which compensates the manufacturer under a cost reimbursement agreement should take an active part in t

45、he determination of how joint costs are allocated because _. A) the manufacturer may allocate a large portion of its other costs to these products B) the business need those information for its tax reporting purposesC) the FASB requires the business to participate in the cost allocation process D) i

46、t is an opportunity for the business to enhance its market knowledgeAnswer: ADiff: 2Objective: 2AACSB: Analytical thinking3) One of the reasons to allocate joint costs to individual products is to aid in the preparation of tax returns.Answer: FALSEDiff: 1Objective: 2AACSB: Analytical thinking4) Allo

47、cating joint costs to individual products can be helpful for litigation settlement purposes in which the costs of joint products or services are key inputs. Answer: TRUEDiff: 1Objective: 2AACSB: Analytical thinking5) List three reasons why we allocate joint costs to individual products or services.

48、Give an example of when the particular cost allocation reason would come into use. Answer: a.For inventory costing, and cost of goods sold computations for financial accounting purposes.Example: Cost of goods sold and ending inventory valuation is necessary for reports to shareholders and for the in

49、land revenue service. b.For internal costing and cost of goods sold computations for internal reporting purposes.Example: These computations are necessary for division profitability analysis. c.Reimbursement under contracts.Example: A firm produces multiple products or services-and uses the same res

50、ources and facilities to produce the products or services. But not all the firms products are under the contract. The firm must allocate the cost of these shared facilities or resources to reflect the portion used by the product under the contract. d.Insurance settlement computations.Example: Where

51、a business with multiple products or services claim losses under an insurance policy and wants to calculate the loss. The insurance company and the insured must agree on the value of the loss. e.Rate regulation. When companies are subject to rate regulation, the allocation of joint costs can be a si

52、gnificant factor in determining the regulated rates.Example: Crude oil and natural gas are produced out of a common well.Diff: 2Objective: 2AACSB: Analytical thinking6) What are the reasons for allocating joint costs to individual products or services? Answer: The joint costs should be allocated to

53、individual products or services to compute inventoriable costs and the cost of goods sold for external reporting purposes. Absorption costing is required for income tax reporting which necessitates the allocation of joint manufacturing or processing costs to products. The costs should be allocated t

54、o also allow for computing cost of goods sold and inventoriable costs for internal reporting purposes of computing division profits and to evaluate the performance of division managers. The costs will be reimbursed under contracts using a cost plus system, often found in government contracts which c

55、alls for allocation of joint costs. Another reason for the cost allocation is to allow for proper valuation and settlement in insurance claims for damages. Also, where joint products are regulated, proper costing is essential. Allocating joint costs can support litigation where the joint product is

56、a key input. Diff: 2Objective: 2AACSB: Analytical thinkingObjective 16.31) Which of the following statements is true of the methods for allocating joint costs?A) Constant gross-margin percentage method results in same joint production cost per unit for all products.B) Estimated net realizable value

57、method results in same gross margin percentage for all products.C) Present value allocation method is the least preferred method due to its complex calculations.D) Sales value at splitoff method uses the sales value of the entire production of the accounting period to allocate costs.Answer: DDiff: 2Objective: 3A