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Exam 6: Joint and By-Product Costing

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Question 1

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Ottawa Ltd. produces two products from a joint process. Information about the two joint products is as follows: The cost of the joint process is £85,000. -Refer to Figure 6-12. Which of Ottawa's joint products should be processed further?

A) Product X only
B) Product Y only
C) both Product X and Product Y
D) neither Product X nor Product Y

E) All of the above
F) A) and B)

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Question 2

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Figure 6-9 Stars Manufacturing Company produces Products A1, B2, C3, and D4 through a joint process. The joint costs amount to £200,000. -Refer to Figure 6-9. If Product B2 is processed further, profits will

A) increase by £30,000.
B) decrease by £3,000.
C) increase by £32,000.
D) increase by £2,000.

E) B) and C)
F) A) and B)

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Question 3

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Figure 6-5 Eden Company manufactures two products, Brights and Dulls, from a joint process. A production run costs £50,000 and results in 250 units of Brights and 1,000 units of Dulls. Both products must be processed past the split-off point, incurring separable costs for Brights of £60 per unit and £40 per unit for Dulls. The market price is £250 for Brights and £200 for Dulls. -Refer to Figure 6-5. What is the amount of joint costs allocated to Dulls using the constant gross margin percentage method?

Which of the following methods allocates joint production costs based on their proportionate share of eventual revenue less further processing costs?

Figure 6-6 Suppose that a sawmill processes logs into four grades of lumber totaling 500,000 board feet as follows at a joint cost of £300,000: -Refer to Figure 6-6. What amount of joint costs will be allocated to No. 2 common using the constant gross margin percentage method?

Figure 6-4 Deli Products produces two products, X and Y, in a single process. In 2011, the joint costs of this process were £25,000. In addition, 4,000 units of X and 6,000 units of Y were produced. Separable processing costs beyond the split-off point were: X-£10,000; Y-£20,000. X sells for £10.00 per unit; Y sells for £7.50 per unit. -Refer to Figure 6-4. What is the gross profit of product Y assuming the physical units method is used?

Figure 6-8 James Ltd. produces three products in a joint process: A, B, and C. The joint costs are as follows: The split-off values for A, B, and C are £80,000, £100,000, and £60,000, respectively. If management processes the three products beyond the split-off point, sales values for A, B, and C would increase to £150,000, £130,000, and £120,000, respectively. In order to process the products further, the company must incur separable costs of £14,000, £12,000, and £10,000 for products A, B, and C, respectively. James uses the sales-value-at-split-off method to allocate joint costs. -Refer to Figure 6-8. Should James Ltd. process A further?

Which of the following is a by-product of agricultural and food Industries?

Figure 6-7 Suppose that a concrete manufacturer produces four grades of concrete totaling 500,000 cubic yards as follows at a joint cost of £2,000,000: -Refer to Figure 6-7. What is the gross profit of Grade D if the constant gross margin percentage method is used?

Carey Ltd. manufactures Products X and Y from a joint process. Joint product costs were £60,000 during the month of December. Additional information is as follows: What is the amount of joint product costs to be allocated to Product X during December using the sales-value-at-split-off method?

Amos, SA., manufactures products A and B from a joint process. Joint product costs were £40,000 during the month of October. Additional information is as follows: Amos uses the sales-value-at-split-off method of joint cost allocation. What is the amount of joint product costs to be allocated to products A and B in October, respectively?

Figure 6-10 Manning Company uses a joint process to produce products W, X, Y, and Z. Each product may be sold at its split-off point or processed further. Additional processing costs of specific products are entirely variable. Joint processing costs for a single batch of joint products are £120,000. Other relevant data are as follows: -Refer to Figure 6-10. Processing Y further will cause profits to

Figure 6-4 Deli Products produces two products, X and Y, in a single process. In 2011, the joint costs of this process were £25,000. In addition, 4,000 units of X and 6,000 units of Y were produced. Separable processing costs beyond the split-off point were: X-£10,000; Y-£20,000. X sells for £10.00 per unit; Y sells for £7.50 per unit. -Refer to Figure 6-4. What is the gross profit of product Y assuming the net realizable value method is used?

Figure 6-8 James Ltd. produces three products in a joint process: A, B, and C. The joint costs are as follows: The split-off values for A, B, and C are £80,000, £100,000, and £60,000, respectively. If management processes the three products beyond the split-off point, sales values for A, B, and C would increase to £150,000, £130,000, and £120,000, respectively. In order to process the products further, the company must incur separable costs of £14,000, £12,000, and £10,000 for products A, B, and C, respectively. James uses the sales-value-at-split-off method to allocate joint costs. -Refer to Figure 6-8. Should James Ltd. process C further?

Information about three joint products follows: The cost of the joint process is £60,000. Which of the joint products should be sold at split-off?

Figure 6-6 Suppose that a sawmill processes logs into four grades of lumber totaling 500,000 board feet as follows at a joint cost of £300,000: -Refer to Figure 6-6. What is the gross profit of No. 3 common if the constant gross margin percentage method is used?

Which of the following would generally be a by-product?

Park Company produces three products in a joint process: A, B, and C. The joint costs are described as follows: The split-off values for A, B, and C are £100,000, £120,000 and £80,000, respectively. If management processes A beyond the split-off point, the sales value of A would increase to £150,000. In order to process A further, the company must rent another facility for £24,000, as well as incur additional materials and labour costs equal to £15,000. Required: a. What is the amount of joint costs allocated to products A, B, and C if the sales value at split-off value method is used? b. Should the division process A further or sell it at split-off? What is the effect of the decision on gross profit?

Amos, SA., manufactures products A and B from a joint process. Joint product costs were £40,000 during the month of October. Additional information is as follows: Sales Values at Product Units Produced Split-Off A 14,000 £110,000 B 6,000 £90,000 Amos uses the physical units method of joint cost allocation. What is the amount of joint product costs to be allocated to products A and B in October, respectively?

Figure 6-7 Suppose that a concrete manufacturer produces four grades of concrete totaling 500,000 cubic yards as follows at a joint cost of £2,000,000: -Refer to Figure 6-7. Grade C can be made into bricks. The final sales value will increase to £900,000. The additional cost to make the bricks is £250,000. Should the concrete be processed into bricks?