Chapter 16 Cost Allocation, Joint Products and Byproducts

Chapter 16 Cost Allocation: Joint Products and Byproducts

Objective 16.1

1) 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: B
Diff: 2
Terms: joint costs
Objective: 1
AACSB: Reflective thinking

2) All costs incurred beyond the splitoff point that are assignable to one or more individual products are
called:
A) byproduct costs
B) joint costs
C) main costs
D) separable costs
Answer: D
Diff: 2
Terms: separable costs, splitoff point
Objective: 1
AACSB: Reflective thinking

3) In joint costing:
A) costs are assigned to individual products as assembly of the product occurs
B) costs are assigned to individual products as disassembly of the product occurs
C) a single production process yields two or more products
D) Both B and C are correct.
Answer: D
Diff: 3
Terms: joint costs
Objective: 1
AACSB: Reflective thinking




1
Copyright © 2012 Pearson Education, Inc.

,4) The ________ point is the juncture in a joint production process when two or more products become
separately identifiable.
A) splitoff
B) joint product
C) process
D) end
Answer: A
Diff: 3
Terms: splitoff point, main products, joint products
Objective: 1
AACSB: Reflective thinking

5) The focus of joint costing is on allocating costs to individual products:
A) before the splitoff point
B) after the splitoff point
C) at the splitoff point
D) at the end of production
Answer: C
Diff: 3
Terms: joint costs, splitoff point
Objective: 1
AACSB: Reflective thinking

6) When a single manufacturing process yields two products, one of which has a relatively high sales
value compared to the other, 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: C
Diff: 2
Terms: main products, byproducts
Objective: 1
AACSB: Reflective thinking

7) When a joint production process yields two or more products with high total sales values, these
products are called:
A) main products
B) joint products
C) byproducts
D) scrap
Answer: B
Diff: 2
Terms: joint products
Objective: 1
AACSB: Reflective thinking




2
Copyright © 2012 Pearson Education, Inc.

,8) Byproducts and main products are differentiated by the:
A) number of units per processing period
B) weight or volume of outputs per period
C) amount of total sales value
D) None of these answers is correct.
Answer: C
Diff: 2
Terms: byproducts, main products
Objective: 1
AACSB: Reflective thinking

9) All of the following changes may indicate a change in product classification of a manufacturing
process which has a splitoff point EXCEPT a:
A) byproduct increases in sales value due to a new application
B) main product becomes a joint product
C) main product becomes technologically obsolete
D) byproduct loses its market due to a new invention
Answer: B
Diff: 2
Terms: splitoff point, main products, joint products
Objective: 1
AACSB: Reflective thinking

10) Which of the following methods of allocating costs use market-based data?
A) Sales value at splitoff method
B) Estimated net realizable value method
C) The constant gross-margin percentage method
D) All of these answers are correct.
Answer: D
Diff: 1
Terms: sales value at splitoff, NRV, constant gross-margin percentage NRV method
Objective: 1
AACSB: Reflective thinking

11) Products with a relatively low sales value are known as:
A) scrap
B) main products
C) joint products
D) byproducts
Answer: D
Diff: 1
Terms: byproducts
Objective: 1
AACSB: Reflective thinking




3
Copyright © 2012 Pearson Education, Inc.

, 12) Which of the following statements is true regarding main products and byproducts?
A) Product classifications do not change over the short run.
B) Product classifications do not change over the long run.
C) Product classifications may change over time.
D) The cause-and-effect criterion determines the classification.
Answer: C
Diff: 3
Terms: main products, byproducts
Objective: 1
AACSB: Reflective thinking

13) Outputs with zero sales value are accounted for by:
A) listing these various outputs in a footnote to the financial statements
B) including the items as a relatively small portion of the value assigned to the products produced during
the accounting period
C) making journal entries to reflect an estimate of possible values
D) None of these answers is correct.
Answer: D
Diff: 3
Terms: byproducts
Objective: 1
AACSB: Reflective thinking

14) Outputs with a negative sales value are:
A) added to cost of goods sold
B) added to joint production costs and allocated to joint or main products
C) added to joint production costs and allocated to byproducts and scrap
D) subtracted from product revenue
Answer: B
Diff: 3
Terms: main products, byproducts
Objective: 1
AACSB: Reflective thinking

15) Joint costs are incurred beyond the splitoff point and are assignable to individual products.
Answer: FALSE
Explanation: Joint costs are incurred prior to the splitoff.
Diff: 2
Terms: joint costs, splitoff point
Objective: 1
AACSB: Reflective thinking

16) Separable costs are incurred beyond the splitoff point that are assignable to each of the specific
products identified at the splitoff point.
Answer: TRUE
Diff: 2
Terms: separable costs, splitoff point
Objective: 1
AACSB: Reflective thinking

4
Copyright © 2012 Pearson Education, Inc.