# 15 2 analyze the physical measure and sales value at splitoff methods to allocate jo 4302752

15.2   Analyze the physical measure and sales value at splitoff methods to allocate joint costs.

1) The cause-and-effect criterion is not present when joint costing is used.

2) It is easier to cost inventory if the joint products are sold before the split off point without further processing.

3) The sales value at split off method allocates joint costs according to each product's value, at the split off point, of the total production in the accounting period of each product.

4) The sales value at split off method can be used to value inventory as well as determining cost of goods sold.

5) One problem with the physical measure method of allocation is that the physical weights used for allocating joint costs may have no relation to the product's ability to produce revenue.

6) A major deficiency of the sales value at splitoff method is that this method does not allow management to obtain individual product costs and gross-margin information.

8) Chem Manufacturing Company processes direct materials up to the split off point, where two products (X and Y) are obtained and sold. The following information was collected for the month of November.

Direct materials processed:

10,000 litres (10,000 litres yield 9,500 litres of good product and 500 litres of shrinkage)

 Production: X 5,000 litres Y 4,500 litres Sales: X 4,750 at \$150 per litre Y 4,000 at \$100 per litre

The cost of purchasing 10,000 litres of direct materials and processing it up to the split off point to yield a total of 9,500 litres of good products was \$975,000.

The beginning inventories totalled 50 litres for X and 25 litres for Y. Ending inventory amounts reflected 300 litres of product X and 525 litres of product Y. October costs per unit were the same as November.

What is the approximate amount of joint costs in Product Y's ending inventory if the physical volume method is used and the company uses the FIFO inventory method?

A) \$50,917

B) \$53,883

C) \$60,145

D) \$60,285

E) \$67,358

9) All of the following methods may be used to allocate joint costs EXCEPT

A) the constant gross-margin percentage NRV method.

B) the estimated net realizable value method.

C) the present-value allocation method.

D) the sales value at split off method.

E) the physical measure method.

10) Which of the following is NOT a strategy for costing inventory when joint-cost circumstances are involved?

A) Allocate costs according to the market selling-price.

B) Allocate costs based on constant gross margin.

C) Allocate costs according to a predetermined physical measure.

D) Use the estimated net realizable value.

E) Aallocate costs according to the amount in the respective cost pools.

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Regards,

Cathy, CS.