Ratcliff Company
Ratcliff Company produces two products from a joint process: X and Z. Joint processing costs for this
production cycle are $8,000.
X
Z
Yards
Sales price
per yard at
split-off
Disposal
cost per
yard at
split-off
Further
processing
per yard
Final sale
price per
yard
1,500
2,200
$6.00
9.00
$3.50
5.00
$1.00
3.00
$ 7.50
11.25
If X and Z are processed further, no disposal costs will be incurred or such costs will be borne by the
buyer.
37. Refer to Ratcliff Company. Using a physical measure, what amount of joint processing cost is
allocated to X (round to the nearest dollar)?
a. $4,000
b. $4,757
c. $5,500
d. $3,243
ANS: D
1,500/3,700 * $8,000 = $3,243
DIF: Easy
OBJ: 11-4
38. Refer to Ratcliff Company. Using a physical measure, what amount of joint processing cost is
allocated to Z (round to the nearest dollar)?
a. $4,000
b. $3,243
c. $5,500
d. $4,757
ANS: D
2,200/3,700 * $8,000 = $4,757
DIF: Easy
OBJ: 11-4
167
39. Refer to Ratcliff Company. Using sales value at split-off, what amount of joint processing cost is
allocated to X (round to the nearest dollar)?
a. $5,500
b. $2,500
c. $4,000
d. $3,243
ANS: B
Sales price
at Split-off
Total
X
$6.00
$ 9,000
Y
$9.00
$19,800
$28,800
$(9,000/28,800) * $8,000 = $2,500
Yards
1,500
2,200
DIF: Moderate
OBJ: 11-4
40. Refer to Ratcliff Company. Using sales value at split-off, what amount of joint processing cost is
allocated to Z (round to the nearest dollar)?
a. $5,500
b. $4,000
c. $2,500
d. $4,757
ANS: A
Sales price
at Split-off
Total
$6.00
$ 9,000
$9.00
$19,800
$28,800
$(19,800/28,800) * $8,000 = $5,500
Yards
X 1,500
Y 2,200
DIF: Moderate
OBJ: 11-4
41. Refer to Ratcliff Company. Using net realizable value at split-off, what amount of joint processing cost
is allocated to X (round to the nearest dollar)?
a. $4,000
b. $5,610
c. $2,390
d. $5,500
ANS: C
Yards
X 1,500
Y 2,200
Sales price Disposal
NRV/
at Split-off Cost/Yard
Splitoff
$6.00
$3.50
$2.50
$9.00
$5.00
$4.00
$(3,750/12,550) * $8,000 = $2,390
DIF: Moderate
OBJ: 11-4
168
Total NRV
$ 3,750
$ 8,800
$12,550
42. Refer to Ratcliff Company. Using net realizable value at split-off, what amount of joint processing cost
is allocated to Z (round to the nearest dollar)?
a. $5,500
b. $4,000
c. $2,390
d. $5,610
ANS: D
Yards
X 1,500
Y 2,200
Sales price Disposal
NRV/
at Split-off Cost/Yard
Splitoff
$6.00
$3.50
$2.50
$9.00
$5.00
$4.00
Total NRV
$ 3,750
$ 8,800
$12,550
$(8,800/12,550) * $8,000 = $5,610
DIF: Moderate
OBJ: 11-4
43. Refer to Ratcliff Company. Using approximated net realizable value at split-off, what amount of joint
processing cost is allocated to X (round to the nearest dollar)?
a. $3,090
b. $5,204
c. $4,000
d. $2,390
ANS: A
Yards
X 1,500
Y 2,200
Final
Sales Price
$ 7.50
$11.25
Separate
Cost per
Yard
$4.50
$8.50
Net Sales
Price
$3.00
$3.25
Approximated
NRV
$ 4,500
$ 7,150
$11,650
$(4,500/11,650) * $8,000 = $3,090
DIF: Moderate
OBJ: 11-4
44. Refer to Ratcliff Company. Using approximated net realizable value at split-off, what amount of joint
processing cost is allocated to Z (round to the nearest dollar)?
a. $2,796
b. $4,910
c. $4,000
d. $2,390
ANS: B
X
Y
Yards
1,500
2,200
Final
Sales Price
$ 7.50
$11.25
Separate
Cost per
Yard
$4.50
$8.50
Net Sales
Price
$3.00
$3.25
Approximated
NRV
$ 4,500
$ 7,150
$11,650
$(7,150/11,650) * $8,000 = $4,910
DIF: Moderate
OBJ: 11-4
45. Refer to Ratcliff Company. Which products would be processed further?
169
a.
b.
c.
d.
only X
only Z
both X and Z
neither X or Z
ANS: A
X
Y
Yards
1,500
2,200
Incremental Incremental
Net
Revenues
Costs
Difference
$ 1.50
$1.00
$ 0.50
$ 2.25
$3.00
$(0.75)
DIF: Moderate
OBJ: 11-4
Gordon Company
Gordon Company produces three products: A, B, and C from the same process. Joint costs for this
production run are $2,100.
A
B
C
Pounds
Sales price
per lb. at
split-off
Disposal
cost per
lb. at
split-off
Further
processing
per pound
800
1,100
1,500
$6.50
8.25
8.00
$3.00
4.20
4.00
$2.00
3.00
3.50
Final
sales price
per pound
$ 7.50
10.00
10.50
If the products are processed further, Gordon Company will incur the following disposal costs upon
sale: A, $3.00; B, $2.00; and C, $1.00.
46. Refer to Gordon Company. Using a physical measurement method, what amount of joint processing
cost is allocated to Product A (round to the nearest dollar)?
a. $700
b. $679
c. $927
d. $494
ANS: D
(800/3,400) * $2,100 = $494
DIF: Easy
OBJ: 11-4
170
47. Refer to Gordon Company. Using a physical measurement method, what amount of joint processing
cost is allocated to Product B (round to the nearest dollar)?
a. $494
b. $679
c. $927
d. $700
ANS: B
(1,100/3,400) * $2,100 = $679
DIF: Easy
OBJ: 11-4
48. Refer to Gordon Company. Using sales value at split-off, what amount of joint processing cost is
allocated to Product B (round to the nearest dollar)?
a. $700
b. $416
c. $725
d. $959
ANS: C
X
Y
Z
Sales price
Yards
at Split-off
800
$6.50
1,100
$8.25
1,500
$8.00
Total
$ 5,200
$ 9,075
$12,000
$26,275
$(9,075/26,275) * $2,100 = $725
DIF: Moderate
OBJ: 11-4
49. Refer to Gordon Company. Using sales value at split-off, what amount of joint processing cost is
allocated to Product C (round to the nearest dollar)?
a. $959
b. $725
c. $700
d. $416
ANS: A
Sales price
Yards
at Split-off
800
$6.50
1,100
$8.25
1,500
$8.00
Total
X
$ 5,200
Y
$ 9,075
Z
$12,000
$26,275
$(12,000/26,275) * $2,100 = $959
DIF: Moderate
OBJ: 11-4
171
50. Refer to Gordon Company. Using net realizable value at split-off, what amount of joint processing cost
is allocated to Product A (round to the nearest dollar)?
a. $706
b. $951
c. $700
d. $444
ANS: D
X
Y
Z
Sales price
Yards
at Split-off
800
$6.50
1,100
$8.25
1,500
$8.00
Net
Disposal Realizable
Costs at
Value at
Split-Off
Splitoff
$3.00
$3.50
$4.20
$4.05
$4.00
$4.00
Total
$ 2,800
$ 4,455
$ 6,000
$13,255
$(2,800/13,255) * $2,100 = $444
DIF: Moderate
OBJ: 11-4
51. Refer to Gordon Company. Using net realizable value at split-off, what amount of joint processing cost
is allocated to Product C (round to the nearest dollar)?
a. $706
b. $951
c. $444
d. $700
ANS: B
X
Y
Z
Sales price
Yards
at Split-off
800
$6.50
1,100
$8.25
1,500
$8.00
Net
Disposal Realizable
Costs at
Value at
Split-Off
Splitoff
$3.00
$3.50
$4.20
$4.05
$4.00
$4.00
$(6,000/13,255) * $2,100 = $951
DIF: Moderate
OBJ: 11-4
172
Total
$ 2,800
$ 4,455
$ 6,000
$13,255
Sabrina Company
Sabrina Company is placing an ad in the local paper to advertise its products. The ad will run for one
week at a total cost of $5,500. Sabrina Company has four categories of products as follows:
% of floor space
occupied
Hardware
Hand Tools
Lawn Furniture
Light Fixtures
20%
15
45
20
Expected sales
value
$35,000
15,000
64,500
25,500
52. Refer to Sabrina Company. What amount of advertising cost should be allocated to hardware,
assuming Sabrina allocates based on percent of floor space occupied?
a. $1,375
b. $1,100
c. $2,475
d. $ 825
ANS: B
$5,500 * 0.20 = $1,100
DIF: Easy
OBJ: 11-4
53. Refer to Sabrina Company. Assume that Sabrina decides to allocate based on expected sales value.
What amount of advertising cost should be allocated to light fixtures (round to the nearest dollar)?
a. $1,375
b. $589
c. $1,002
d. $2,534
ANS: C
$(25,500/140,000) * $5,500 = $1,002
DIF: Moderate
OBJ: 11-4
Versatile Company
Versatile Company produces four solvents from the same process: C, D, E, and G. Joint product costs
are $9,000. (Round all answers to the nearest dollar.)
C
D
E
G
Barrels
Sales price
per barrel
at split-off
750
1,000
1,400
2,000
$10.00
8.00
11.00
15.00
Disposal
cost
per barrel
at split-off
$6.50
4.00
7.00
9.50
Further
processing
costs
$2.00
2.50
4.00
4.50
Final
sales
price
per barrel
$13.50
10.00
15.50
19.50
If Versatile sells the products after further processing, the following disposal costs will be incurred: C,
$2.50; D, $1.00; E, $3.50; G, $6.00.
173
54. Refer to Versatile Company. Using a physical measurement method, what amount of joint processing
cost is allocated to Product D?
a. $1,748
b. $2,447
c. $1,311
d. $3,495
ANS: A
(1,000/5,150) * $9,000 = $1,748
DIF: Moderate
OBJ: 11-4
55. Refer to Versatile Company. Using a physical measurement method, what amount of joint processing
cost is allocated to Product E?
a. $3,495
b. $2,447
c. $1,748
d. $1,311
ANS: B
(1,400/5,150) * $9,000 = $2,447
DIF: Moderate
OBJ: 11-4
56. Refer to Versatile Company. Using a physical measurement method, what amount of joint processing
cost is allocated to Product C?
a. $3,495
b. $2,447
c. $1,748
d. $1,311
ANS: D
(750/5,150) * $9,000 = $1,311
DIF: Moderate
OBJ: 11-4
57. Refer to Versatile Company. Using a physical measurement method, what amount of joint processing
cost is allocated to Product G?
a. $3,495
b. $2,447
c. $1,748
d. $1,311
ANS: A
(2,000/5,150) * $9,000 = $3,495
DIF: Moderate
OBJ: 11-4
174
58. Refer to Versatile Company. Using sales value at split-off, what amount of joint processing cost is
allocated to Product D?
a. $4,433
b. $2,276
c. $1,108
d. $1,182
ANS: D
Sales Price
at Split-Off
Product Barrels
C
750
$10.00
D
1,000
$ 8.00
E
1,400
$11.00
G
2,000
$15.00
Total
$ 7,500
$ 8,000
$ 15,400
$30,000
$60,900
$(8,000/60,900) * $9,000 = $1,182
DIF: Moderate
OBJ: 11-4
59. Refer to Versatile Company. Using sales value at split-off, what amount of joint processing cost is
allocated to Product C?
a. $4,433
b. $2,276
c. $1,108
d. $1,182
ANS: C
Product Barrels
C
750
D
1,000
E
1,400
G
2,000
Sales Price
at Split-Off
$10.00
$ 8.00
$11.00
$15.00
Total
$ 7,500
$ 8,000
$ 15,400
$30,000
$60,900
$(7,500/60,900) * $9,000 = $1,108
DIF: Moderate
OBJ: 11-4
175
60. Refer to Versatile Company. Using sales value at split-off, what amount of joint processing cost is
allocated to Product G?
a. $4,433
b. $1,182
c. $1,108
d. $2,276
ANS: A
Sales Price
at Split-Off
Product Barrels
C
750
$10.00
D
1,000
$ 8.00
E
1,400
$11.00
G
2,000
$15.00
Total
$ 7,500
$ 8,000
$ 15,400
$30,000
$60,900
$(30,000/60,900) * $9,000 = $4,433
DIF: Moderate
OBJ: 11-4
61. Refer to Versatile Company. Using sales value at split-off, what amount of joint processing cost is
allocated to Product E?
a. $4,433
b. $1,182
c. $1,108
d. $2,276
ANS: D
Product Barrels
C
750
D
1,000
E
1,400
G
2,000
Sales Price
at Split-Off
$10.00
$ 8.00
$11.00
$15.00
Total
$ 7,500
$ 8,000
$ 15,400
$30,000
$60,900
$(15,400/60,900) * $9,000 = $2,276
DIF: Moderate
OBJ: 11-4
176
62. Refer to Versatile Company. Using net realizable value at split-off, what amount of joint processing
cost is allocated to Product C?
a. $1,550
b. $1,017
c. $4,263
d. $2,170
ANS: B
Product
C
D
E
G
Barrels
750
1,000
1,400
2,000
Sales Price
at Split-Off
$10.00
$ 8.00
$11.00
$15.00
Net
Disposal Realizable
Cost at
Value at
Split-Off Split-Off
$6.50
$3.50
$4.00
$4.00
$7.00
$4.00
$9.50
$5.50
Total
$ 2,625
$ 4,000
$ 5,600
$11,000
$23,225
$(2,625/23,225) * $9,000 = $1,017
DIF: Moderate
OBJ: 11-4
63. Refer to Versatile Company. Using net realizable value at split-off, what amount of joint processing
cost is allocated to Product D?
a. $1,550
b. $1,017
c. $4,263
d. $2,170
ANS: A
Product
C
D
E
G
Barrels
750
1,000
1,400
2,000
Sales Price
at Split-Off
$10.00
$ 8.00
$11.00
$15.00
Net
Disposal Realizable
Cost at
Value at
Split-Off Split-Off
$6.50
$3.50
$4.00
$4.00
$7.00
$4.00
$9.50
$5.50
$(4,000/23,225) * $9,000 = $1,550
DIF: Moderate
OBJ: 11-4
177
Total
$ 2,625
$ 4,000
$ 5,600
$11,000
$23,225
64. Refer to Versatile Company. Using net realizable value at split-off, what amount of joint processing
cost is allocated to Product E?
a. $1,017
b. $1,550
c. $2,170
d. $4,263
ANS: C
Product
C
D
E
G
Barrels
750
1,000
1,400
2,000
Sales Price
at Split-Off
$10.00
$ 8.00
$11.00
$15.00
Net
Disposal Realizable
Cost at
Value at
SplitSplit-Off
Off
$6.50
$3.50
$4.00
$4.00
$7.00
$4.00
$9.50
$5.50
Total
$ 2,625
$ 4,000
$ 5,600
$11,000
$23,225
$(5,600/23,225) * $9,000 = $2,170
DIF: Moderate
OBJ: 11-4
65. Refer to Versatile Company. Using net realizable value at split-off, what amount of joint processing
cost is allocated to Product G?
a. $1,017
b. $1,550
c. $2,170
d. $4,263
ANS: D
Product
C
D
E
G
Barrels
750
1,000
1,400
2,000
Sales Price
at Split-Off
$10.00
$ 8.00
$11.00
$15.00
Net
Disposal Realizable
Cost at
Value at
SplitSplit-Off
Off
$6.50
$3.50
$4.00
$4.00
$7.00
$4.00
$9.50
$5.50
$(11,000/23,225) * $9,000 = $4,263
DIF: Moderate
OBJ: 11-4
178
Total
$ 2,625
$ 4,000
$ 5,600
$11,000
$23,225
Uniflo Company
Uniflo Company produces three products from the same process that has joint processing costs of
$4,100. Products R, S, and T are produced in the following quantities: 250 gallons, 400 gallons, and
750 gallons. Uniflo Company also incurred advertising costs of $60,000. The ad was used to run sales
for all three products. The three products occupy floor space in the following ratio: 5:4:9. (Round all
answers to the nearest dollar.)
66. Refer to Uniflo Company. Using gallons as the physical measurement, what amount of joint
processing cost is allocated to Product R?
a. $2,196
b. $1,171
c. $1,367
d. $ 732
ANS: D
(250/1,400) * $4,100 = $732
DIF: Easy
OBJ: 11-4
67. Refer to Uniflo Company. Using gallons as the physical measurement, what amount of joint
processing cost is allocated to Product S?
a. $2,196
b. $1,171
c. $1,367
d. $ 732
ANS: B
(400/1,400) * $4,100 = $1,171
DIF: Easy
OBJ: 11-4
68. Refer to Uniflo Company. Using gallons as the physical measurement, what amount of joint
processing cost is allocated to Product T?
a. $2,196
b. $732
c. $1,367
d. $1,171
ANS: A
(750/1,400) * $4,100 = $2,196
DIF: Easy
OBJ: 11-4
179
69. Refer to Uniflo Company. Assume that Uniflo chooses to allocate its advertising cost among the three
products. What amount of advertising cost is allocated to Product R using the floor space ratio?
a. $30,000
b. $17,806
c. $1,139
d. $16,667
ANS: D
$60,000 * 5/18 = $16,667
DIF: Easy
OBJ: 11-4
70. Refer to Uniflo Company. Assume that Uniflo chooses to allocate its advertising cost among the three
products. What amount of advertising cost is allocated to Product S using the floor space ratio?
a. $911
b. $14,244
c. $13,333
d. $30,000
ANS: C
4/18 * $60,000 = $13,333
DIF: Easy
OBJ: 11-4
71. Refer to Uniflo Company. Assume that Uniflo chooses to allocate its advertising cost among the three
products. What amount of advertising cost is allocated to Product T using the floor space ratio?
a. $911
b. $14,244
c. $13,333
d. $30,000
ANS: D
9/18 * $60,000 = $30,000
DIF: Easy
OBJ: 11-4
72. Courtney Company manufactures products A and B from a joint process. Sales value at split-off was
$700,000 for 10,000 units of A, and $300,000 for 15,000 units of B. Using the sales value at split-off
approach, joint costs properly allocated to A were $140,000. Total joint costs were
a. $ 98,000.
b. $200,000.
c. $233,333.
d. $350,000.
ANS: B
$(700,000/1,000,000) * X = $140,000
.70X = $140,000
X = $200,000
DIF: Easy
OBJ: 11-4
180
Whalen Company manufactures products X and Y from a joint process that also yields a by-product,
Z. Revenue from sales of Z is treated as a reduction of joint costs. Additional information is as
follows:
X
Units produced
Joint costs
Sales value at
split-off
Products
Y
Z
Total
20,000
?
20,000
?
10,000
?
50,000
$262,000
$300,000
$150,000
$10,000
$460,000
Joint costs were allocated using the sales value at split-off approach.
73. Refer to Whalen Company. The joint costs allocated to product X were
a. $ 84,000
b. $100,800.
c. $150,000.
d. $168,000.
ANS: D
$262,000 * $(300,000/450,000) = $174,667 preliminary allocation to Product X
$10,000 * $(300,000/450,000) = $6,667 reduction in joint cost from sales of Product Z
$(174,667 - 6,667) = $168,000
DIF: Easy
OBJ: 11-5
74. Refer to Whalen Company. The joint costs allocated to product Y were
a. $ 84,000
b. $100,800.
c. $150,000.
d. $168,000.
ANS: A
$262,000 * $(150,000/450,000) = $87,333 preliminary allocation to Product X
$10,000 * $(150,000/450,000) = $3,333 reduction in joint cost from sales of Product Z
$(87,333 - 3,333) = $84,000
DIF: Easy
OBJ: 11-5
75. In joint-product costing and analysis, which of the following costs is relevant in the decision when a
product should be sold to maximize profits?
a. Separable costs after the split-off point
b. Joint costs to the split-off point
c. Sales salaries for the production period
d. Costs of raw materials purchased for the joint process.
ANS: A
DIF: Easy
OBJ: 11-3
181
Tropical Company
Tropical Company manufactures three products in a joint process which costs $25,000. Each product
can be sold at split-off or processed further and then sold. 10,000 units of each product are
manufactured. The following information is available for the three products:
Product
Sales Value
at Split-off
Separable
Processing
Costs after Split-off
$12
$9
10
4
15
6
A
B
C
Sales Value
at Completion
$21
17
19
76. Refer to Tropical Company. If Product A is processed beyond the split-off point, profit will:
a. increase by $210,000
c. increase by $ 90,000
b. increase by $120,000
d. remain unchanged
ANS: D
Increase in value:
Separable processing costs:
No increase in profit
DIF: Easy
$9 per unit
$9 per unit
OBJ: 11-4
77. Refer to Tropical Company. To maximize profits, which products should Tropical process further?
a. Product A only
c. Product C only
b. Product B only
d. Products A, B, and C
ANS: B
Product
A
B
C
Separable
Incremental
Processing
Revenues
Costs after Split-off
$9
$9
7
4
4
6
DIF: Moderate
Incremental
profit Increase
$0
3
(2)
OBJ: 11-4
182