COLEGIO DE DAGUPAN

Arellano Street, Dagupan City

School of Business and Accountancy

COST ACCOUNTING
First Semester, AY 2017-2018
Quiz No. 6

Choose the BEST answer. Encircle the letter of your answer. No erasures allowed.

1. 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

2. 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

3. Products with a relatively low sales value are known as:

A) scrap
B) main products
C) joint products
D) byproducts

4. 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.

5. Which of the following is a reason to allocate joint costs?

A) rate regulation requirements, if applicable
B) cost of goods sold computations
C) insurance settlement cost information requirements
D) All of these answers are correct.

6. Which of the following is NOT a primary reason for allocating joint costs?
A) cost justification and insurance settlement cost information requirements
B) cost justification and asset measurement
C) income measurement and rate regulation requirements
D) to calculate the bonus of the chief executive officer

7. The physical-measure method:

A) allocates joint costs to joint products in a way that each product has an identical gross-margin
percentage
B) allocates joint costs to joint products on the basis of a comparable physical measure at the splitoff
point
C) allocates joint costs to joint products on the basis of the relative sales value at the splitoff point
D) allocates joint costs to joint products on the basis of relative NRV

8. Which of the following statements is true in regard to the cause-and-effect relationship between
allocated joint costs and individual products?
A) A high individual product value results in a high level of joint costs.

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B) A low individual product value results in a low level of joint costs.
C) A high individual product value results in a low level of joint costs.
D) There is no cause-and-effect relationship.

9. A reason why a physical-measure to allocate joint costs is less preferred than the sales value at
splitoff is:
A) a physical measure such as volume is difficult to estimate because of shrinkage
B) physical volume usually has little relationship to the revenue producing power of products
C) a physical measure usually results in the costs being allocated to the product that weighs the most
D) All of these answers are correct.

10. What factor most often drives joint cost allocation?

A) performance evaluation
B) manager compensation
C) selling prices
D) simplicity of the method

Answer questions 11 and 12 using the information below:

St. Jude Manufacturing purchases trees from Cheney Lumber and processes them up to the splitoff point
where two products (paper and pencil casings) are obtained. The products are then sold to an
independent company that markets and distributes them to retail outlets. The following information was
collected for the month of November:

Trees processed: 100 trees (yield is 60,000 sheets of paper and 60,000 pencil casings and no
scrap)
Production: paper 60,000 sheets
pencil casings 60,000
Sales: paper 58,000 at P0.04 per page
pencil casings 60,000 at P0.10 per casing

The cost of purchasing 100 trees and processing them up to the splitoff point to yield 60,000 sheets of
paper and 60,000 pencil casings is P3,000.
St. Jude's accounting department reported no beginning inventories and an ending inventory of 2,000
sheets of paper.

11. What is the sales value at the splitoff point for paper?
A) P240
B) P2,320
C) P2,400
D) P3,900

12. What is the sales value at the splitoff point of the pencil casings?
A) P600
B) P2,460
C) P6,000
D) P7,500

13. The St. Joseph Corporation manufactures widgets, gizmos, and turnbols from a joint process. May
production is 2,000 widgets; 3,500 gizmos; and 4,000 turnbols. Respective per unit selling prices at
splitoff are P30, P20, and P10. Joint costs up to the splitoff point are P75,000. If joint costs are allocated
based upon the sales value at splitoff, what amount of joint costs will be allocated to the widgets?
A) P30,882
B) P26,471
C) P17,647
D) P28,125

14. Product X is sold for P32 a unit and Product Y is sold for P48 a unit. Each product can also be sold at
the splitoff point. Product X can be sold for P10 and Product Y for P8. Joint costs for the two products

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totaled P2,000 for January for 300 units of X and 250 units of Y. What are the respective joint costs
assigned each unit of products X and Y if the sales value at splitoff method is used?
A) P2.96 and P4.44
B) P4.00 and P4.55
C) P4.00 and P3.20
D) P4.55 and P4.55

Answer questions 15-17 using the information below:

The San Beda Corporation processes a liquid component up to the splitoff point where two products,
Mr.DirtOut and Mr. SinkClean, are produced and sold. There was no beginning inventory. The following
material was collected for the month of January:

Direct materials processed: 250,000 gallons (242,500 gallons of good product)

Production: Mr. DirtOut 147,500 gallons
Mr. SinkClean 95,000 gallons
Sales: Mr. DirtOut 140,500 at P110 per gallon
Mr. SinkClean 91,000 at P 100 per gallon

The cost of purchasing 250,000 gallons of direct materials and processing it up to the splitoff point to
yield a total of 242,500 gallons of good product was P760,000.

15, What are the physical-volume proportions to allocate joint costs for Mr. DirtOut and Mr. SinkClean,
respectively?
A) 59.00% and 41.00%
B) 60.82% and 39.18%
C) 39.18% and 60.82%
D) 59.79% and 40.21%

16. When using a physical-volume measure, what is the approximate amount of joint costs that will be
allocated to Mr. DirtOut and Mr. SinkClean?
A) P464,232 and P297,768
B) P448,400 and P311,600
C) P454,404 and P305,596
D) P461,252 and P298,748

17. When using the physical-volume method, what is Mr. DirtOut's approximate production cost per
unit?
A) P3.02
B) P3.08
C) P3.14
D) P3.22

Answer questions 18-24 using the information below:

The St. Peter Company processes unprocessed goat milk up to the splitoff point where two products,
condensed goat milk and skim goat milk result. The following information was collected for the month
of October:

Direct Materials processed: 130,000 gallons (shrinkage was 10%)

Production: condensed goat milk 52,200 gallons
skim goat milk 64,800 gallons
Sales: condensed goat milk P3.50 per gallon
skim goat milk P2.50 per gallon

The costs of purchasing the 130,000 gallons of unprocessed goat milk and processing it up to the splitoff
point to yield a total of 117,000 gallons of salable product was P144,480. There were no inventory
balances of either product.

Condensed goat milk may be processed further to yield 39,000 gallons (the remainder is shrinkage) of a

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medicinal milk product, Xyla, for an additional processing cost of P3 per usable gallon. Xyla can be sold
for P18 per gallon.

Skim goat milk can be processed further to yield 56,200 gallons of skim goat ice cream, for an
additional processing cost per usable gallon of P2.50. The product can be sold for P9 per gallon.
There are no beginning and ending inventory balances.

18. What is the estimated net realizable value of Xyla at the splitoff point?
A) P365,300
B) P505,800
C) P585,000
D) P702,000

19. What is the estimated net realizable value of the skim goat ice cream at the splitoff point?
A) P365,300
B) P505,800
C) P220,400
D) P170,900

20. Using estimated net realizable value, what amount of the P72,240 of joint costs would be allocated
Xyla and the skim goat ice cream?
A) P83,942 and P60,538
B) P88,942 and P55,538
C) P65,592 and P78,888
D) P144,480 and P72,140

21. Using the sales value at splitoff method, what is the gross-margin percentage for condensed goat
milk at the splitoff point?
A) 21.1%
B) 55.1%
C) 58.1%
D) 38.2%

22. Using the sales value at splitoff method, what is the gross-margin percentage for skim goat milk at
the splitoff point?
A) 21.1%
B) 55.1%
C) 58.1%
D) 38.2%

23. How much (if any) extra income would St. Peter earn if it produced and sold all of the Xyla from the
condensed goat milk? Allocate joint processing costs based upon relative sales value on the splitoff.
(Extra income means income in excess of what St. Peter would have earned from selling condensed goat
milk.)
A) P106,126
B) P508,426
C) P402,300
D) P193,574

24. How much (if any) extra income would St. Peter earn if it produced and sold skim milk ice cream from
goats rather than goat skim milk? Allocate joint processing costs based upon the relative sales value at
the splitoff point.
A) P94,094
B) P234,594
C) P203,300
D) P140,500

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25. St. John Manufacturing Company processes direct materials up to the splitoff 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 gallons (10,000 gallons yield 9,500 gallons of good product and
500 gallons of shrinkage)
Production: X 5,000 gallons
Y 4,500 gallons
Sales: X 4,750 at P150 per gallon
Y 4,000 at P100 per gallon

The cost of purchasing 10,000 gallons of direct materials and processing it up to the splitoff point to
yield a total of 9,500 gallons of good products was P975,000.

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

Using the physical-volume method, what is Product X's approximate gross-margin percentage?
A) 32%
B) 33%
C) 35%
D) 38%

26. St. James Company processes 15,000 gallons of direct materials to produce two products, Product X
and Product Y. Product X sells for P8 per gallon and Product Y, the main product, sells for P100 per gallon.
The following information is for August:
Beginning Ending
Production Sales Inventory Inventory
Product X: 4,375 4,000 0 375
Product Y: 10,000 9,625 125 500
The manufacturing costs totaled P30,000.

What is the byproduct's net revenue reduction if byproducts are recognized in the general ledger
during production and their revenues are a reduction of cost?
A) P0
B) P3,000
C) P32,000
D) P35,000

Bonus (2pts):
What makes you happy? 

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