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Cost Accounting 2
HOLY TRINITY UNIVERSITY

Quiz 5 Joint Products & By-Products Costing/JIT/Backflush

Name:

Please write your answer on the space provided.

_____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 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

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______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?

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 P 28 P 30 P 25
per unit
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

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______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:
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 produced 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

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______11 Lite Co. manufactureres Product X and Y from a joint process that also yields a by-
product, Z. Revenue from 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 were

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 production 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 P1,152,000.
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 net realizable value method for allocating joint production costs, what
would be the amount of joint costs allocated 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 after split-off sales value of P45,000. However, if Ralin were to be
processed further, additional costs of P6,000 will be incurred but the sale value will
increase to P60,000. Joie produced 6,000 units of Stalin with an after split-off 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 will go up to P36,000. Under the relative sales value at split-off
approach, the allocation to Ralin from total product cost is P27,000.

What is the total product cost?

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

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_____14
A chemical company which uses a joint process manufactures products O, P, and M,
which are all derived from one input. The company allocates joint costs to the products in
proportion to the relative physical volume of output. The company may either sell the
products at the point of split-off or process further in order to maximize profits. The
following data were obtained from February:

If processed further
No. of units Sales price/unit
Sales Price Additional cost
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 product M was sold at the point of split-off. The gross profit of the
company derived from the production process for the month 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 gallons of direct materials, and processing these up to split-off point will
yield 300,000 gallons of Shell and 270,000 gallons of Caltex , net of 30,000 gallons
evaporation, at a total production costs of P17,100,000. The selling price of Shell is P500
per gallon and P400 per gallon for Caltex. Records show that on May 1, there were
24,000 gallons of Shell and 15,000 gallons of Caltex; at the end of May, there were
36,000 gallons of Shell and 39,000 gallons of Caltex.

Using the quantitative unit method of allocating joint production costs, what would be the
allocated cost for Product 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
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

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______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 changing 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 month of June of P205,000 and materials cost in the June 30 Raw
and In Process of P12,500. What would be the amount to 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 conversion costs to the cost of goods sold account. At the end of each
month, all inventories are counted, their conversion cost 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 installments) Php100,000.00
RIP Inventory account, May 31 including
P650 estimated conversion cost 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

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______20
The Backflushers Manufacturing Corp uses a Raw and In Process inventory account and
expenses all conversion costs to the cost of goods sold account. At the end of each
month, all inventories are counted, their conversion cost 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 conversion cost Php11,250.00
Raw materials received during May (50%
down, balance in 4 installments) Php100,000.00
RIP Inventory account, May 31 including
P650 estimated conversion cost Php5,250.00

Finished goods inventory account, May 31,including

P2,500 of conversion cost estimate 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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