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Cost Accounting 2
HOLY TRINITY UNIVERSITY
(S.Y. 2019-2020:1ST Sem)

Quiz 3

1 The allocation of joint costs to individual products is useful primarily for purposes of

a. Determining whether to produce one of the joint products

b. Inventory costing
c. Determining the best market price
c. Evaluating whether an output is a main product or a by-product

2 The method used for the allocation of joint costs to products is important

a. Only in the minds of accountants

b. Because profits will be affected when ending inventories change from beginning of the period
c. Because its validity for justifying prices before regulatory authorities is unquestioned
d. Because profit margins differ when relative sales value method is used

3 For purposes of allocating joint costs to joint products using the relative sales value at split-off
method, the costs beyond split-off

a. Are allocated in the same manner as the joint costs

b. Are deducted from the relative sales value at split-off
c. Are deducted from the sales value at the point of sale
d. Do not affect the allocation of the joint costs

4 Idaho Corp. manufactures liquid chemicals A and B from a joint process. Joint costs are allocated
on the basis of relative market value at split-off. It costs P4,560 to process 500 gallons of Product A
And 1000 gallons of Product B to split-off point. The market value at split-off is P10 per gallon for
Product A and P14 for product B. Product B requires an additional process beyond split-off at a cost
of P2 per gallon before it can be sold. What is Idaho's cost to produce 1,000 gallons of Product B?

a. 5,040 c. 4,860
b. 4,360 d. 5,360

5 Lane Co. produces main products Kul and Wu. The process also yields by-product Zef. Net
realizable value of by-product Zef is subtracted from joint production cost of Kul and Wu. The following
information pertains to production in July at a joint cost of P54,000:

Units Market Additional Cost

Product Produced Value after split-off
Kul 1,000 P 40,000 P 0
Wu 1,500 35,000 0
Zef 500 7,000 3,000

If Lane uses the net realizable value method for allocating joint cost, how much of the joint cost should
be allocated to product Kul?

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g of the period

e at split-off

ts are allocated
lons of Product A
0 per gallon for
d split-off at a cost
ns of Product B?

t Zef. Net
nd Wu. The following

the joint cost should

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a. 18,800 c. 26,667
b. 20,000 d. 27,342

6 A company processes raw material into Product F1, F2, and F3. Each ton of raw materials produces
five units of F1, two units of F2, and three units of F3. Joint processing costs to the split-off point are
P15 per ton. Further processing results in the following per unit figures:

F1 F2 F3
Additional processing costs per unit P 28 P 30 P 25
Selling price per unit 30 35 35

If joint costs are allocated by the net realizable value of finished product, what proportion of joint costs
should be allocated to F1?

a. 20% c. 33 1/3%
b. 30% d. 50%

7 Dennis Manufacturing Co. manufactures two joint products. Product A sells at P30, while Product B sells
at P60. The company uses the net realizable value method for allocating joint costs. For the month of
June, the production activities were as follows:

Joint product costs:

Raw Materials 30,000
Direct Labor 15,000
Factory Overhead 10,000

Further processing costs after the split-off point in order to finish thje products into ther final form were
P24,000 for Product A and P36,000 for Product B. Total number of units produced during the month
were 2000 for product A and 1000 for Product B. The joint costs allocated to A was:

a. 22,000 c. 27,500
b. 33,000 d. Answer not given

8 Lego Plastic, Inc. has two joints products, Abba and Adda, and uses net realizable value method of
allocating joint costs. The total joint costs for May amounted to P300,000. During the month,
Additional processing costs after split-off were P160,000 for Abba and P240,000 for Adda. Lego
Produced 16,000 units of Abba and 8,000 units of Adda during the month. The sales value of Abba
P500 per unit and for Adda P1,000 per unit. The portion of Joint costs allocated to Adda during
the month is:

a. 175,000 c. 225,000
b. 180,000 d. 150,000

9 Mig Co., which began operations in 2014,produces gasoline and a gasoline by-product. The following
information is available pertaining to 2014 sales and production:

Total production costs to split-off point 120,000

Gasoline sales 270,000
By-products sale 30,000
Gasoline inventory, 12/31/2014 15,000
Additional by-product cost:

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materials produces
e split-off point are

portion of joint costs

, while Product B sells

s. For the month of

ther final form were

during the month

value method of

or Adda. Lego
es value of Abba
Adda during

oduct. The following

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Marketing 10,000
Production 15,000

Mig Accounts for the by-product at the time of production. What are Mig's 2014 cost of sales for gasoline
and the by-product?

Gasoline By-product
a. 105,000 25,000
b. 115,000 0
c. 108,000 37,000
d. 100,000 0

10 The following information pertains to a by-product called Moy:

Sales in 2014 5000 units

Selling Price per unit P 6.00
Selling Cost per unit 2
Processing Cost 0

Inventory of Moy was recorded at net realizable value when produced in 2013. No units of Moy were produ
In 2014. What amount should be recoginized as profit on Moy's 2014 sales?

a. 0 c. 20,000
b. 10,000 d. 30,000

11 Lite Co. manufactureres Product X and Y from a joint process that also yields a by-product, Z. Revenue fro
sales of Z is treated as reduction of joint costs. Additional information is as follows:

PRODUCTS
X Y Z Total
Units Produce 20,000 20,000 10,000 50,000
Joint Cost ? ? ? 262,000
Sales Value at
Split-off 300,000 150,000 10,000 460,000

Joint Cost were allocated using the sales value at split-off approach. The joint costs allocated to product X

a. 75,000 c. 150,000
b. 100,000 d. 168,000

12 High Tests Chemicals, Inc. produces Product Love and Potion from a process and incident to their product
recovers a by-product, No. One. The net realizable value of the by-product, No. One is treated as reduction
of the joint production costs. For the month of October, the joint costs of processing amounted to P1,152,0
Additional information is shown below:

Product Production Market Value

Love 550,000 P 900,000
Potion 825,000 600,000
No. One 275,000 126,000

An additional processing costs of P54,000 was spent to complete the processing of No. One. Using the ne

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st of sales for gasoline

units of Moy were produced

y-product, Z. Revenue from

ts allocated to product X were

incident to their production

ne is treated as reduction
g amounted to P1,152,000.

of No. One. Using the net

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realizable value method for allocating joint production costs, what would be the amount of joint costs alloca
to Product Love?

a. 540,000 c. 662,000
b. 648,000 d. 810,000

13 Joie Co. manufactures two joint products (Ralin and Stalin). Joie produced 12,000 units of Ralin with an aft
split-off sales value of P45,000. However, if Ralin were to be processed further, additional costs of P6,000
incurred but the sale value will increase to P60,000. Joie produced 6,000 units of Stalin with an after split-o
sales value of P30,000.

However, if Stalin were to be further processed, additional cost of P3,000 will be incurred but the sale value
up to P36,000. Under the relative sales value at split-off approach, the allocation to Ralin from total produc
is P27,000.

What is the total product cost?

a. 75,000 c. 27,000
b. 45,000 d. 67,500

14 A chemical company which uses a joint process manufactures products O, P, and M, which are all derived
one input. The company allocates joint costs to the products in proportion to the relative physical volume o
output. The company may either sell the products at the point of split-off or process further in order to maxi
profits. The following data were obtained from February:

If processed further
No. of units Sales Price Additional cost
Sales price/unit
produced as split-off per unit per unit
O 2000 Php4.00 Php5.00 Php0.80
P 3000 Php2.25 Php4.00 Php1.50
M 1500 Php3.00 Php3.75 Php0.90

Joint production costs were P15,000.Additional processing on products O and P were performed, while pro
was sold at the point of split-off. The gross profit of the company derived from the production process for th
of February was:

a. 4,250 c. 5,400
b. 5,175 d. 6,525

15
Sheltex Corp processes materials and recovers Product Shell and Caltex. The cost of buying 600,000 g
direct materials, and processing these up to split-off point will yield 300,000 gallons of Shell and 270,000 g
Caltex , net of 30,000 gallons evaporation, at a total production costs of P17,100,000. The selling price o
P500 per gallon and P400 per gallon for Caltex. Records show that on May 1, there were 24,000 gallons
and 15,000 gallons of Caltex; at the end of May, there were 36,000 gallons of Shell and 39,000 gallons of C

Using the quantitative unit method of allocating joint production costs, what would be the allocated cost for
Shell and Caltex, respectively?

a. 8,100,000 ; 9,000,000
b. 8,550,000 ; 8,550,000
c. 8,700,000 ; 8,400,000

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mount of joint costs allocated

units of Ralin with an after

dditional costs of P6,000 will be
Stalin with an after split-off

ncurred but the sale value will go

o Ralin from total product cost

M, which are all derived from

elative physical volume of
s further in order to maximize

were performed, while product M

production process for the month

cost of buying 600,000 gallons of

s of Shell and 270,000 gallons of
0,000. The selling price of Shell is
here were 24,000 gallons of Shell
ll and 39,000 gallons of Caltex.

be the allocated cost for Product

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d. 9,000,000 ; 8,100,000

16 One of the requirements for a JIT system to be successful is

a. Cyclical production
b. Adequate inventory stock
c. Coupling it with job order costing
d. High quality and balanced work loads

17 A company has an annual carrying cost percentage of 30% and average work in process of P300,000. The
management plans to use the JIT production system to double the velocity of work in process without chan
total annual output. What would be the savings in annual carrying costs?

a. 90,000 c. 150,000
b. 45,000 d. 180,000

18 Cheetah Co. has materials cost in June 1 Raw and In Process of P10,000, materials received during the m
June of P205,000 and materials cost in the June 30 Raw and In Process of P12,500. What would be the am
be backflushed from RIP to Finished Goods at the end of June?

a. 215,000 c. 207,500
b. 202,500 d. 217,500

19
The Backflushers Manufacturing Corp uses a Raw and In Process inventory account and expenses all con
costs to the cost of goods sold account. At the end of each month, all inventories are counted, their conver
components are estimated and inventory account balances are adjusted accordingly. Raw material cost is
backflushed from RIP to finished goods. The ff information is for the month of May:

RIP Inventory account, May 1 including P500 conversion cost Php5,000.00

Raw materials received during May (50% down, balance in 4 installme Php100,000.00
RIP Inventory account, May 31 including P650 estimated conversion c Php5,250.00

What is the amount to be backflushed from RIP to finished goods?

a. 90,900 c. 104,500
b. 99,900 d. 109,100

20
The Backflushers Manufacturing Corp uses a Raw and In Process inventory account and expenses all con
costs to the cost of goods sold account. At the end of each month, all inventories are counted, their conver
components are estimated and inventory account balances are adjusted accordingly. Raw material cost is
backflushed from RIP to finished goods. The ff information is for the month of May:

RIP Inventory account, May 1 including P500 conversion cost Php5,000.00

Finished goods inventory account, May 1,including P3,250 of conversi Php11,250.00
Raw materials received during May (50% down, balance in 4 installme Php100,000.00
RIP Inventory account, May 31 including P650 estimated conversion c Php5,250.00
Finished goods inventory account, May 31,including P2,500 of convers Php7,500.00

What is the amount to be backflushed from RIP to finished goods?

a. 107,900 c. 112,900
b. 102,900 d. 86,900

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rocess of P300,000. The

k in process without changing

als received during the month of

00. What would be the amount to

unt and expenses all conversion

are counted, their conversion cost
gly. Raw material cost is
:

unt and expenses all conversion

are counted, their conversion cost
gly. Raw material cost is
:

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